What You Need to Know About Health Insurance
(A public education series designed to educate the community and to empower them to make informed decision about their health care needs and services)
Vereline Johnson, MSN, BSN, RN, CPHRM, CPHQ
Risk Manager
Saint Francis Healthcare System
Health insurance is a crucial component of the healthcare system, providing financial protection against high medical costs and ensuring access to necessary healthcare services. It operates as a contract between an individual and an insurance company, where the insurer agrees to cover a portion of the medical expenses incurred by the policyholder in exchange for regular premium payments. This article will provide an overview of health insurance, including its types, benefits, key terms, and the importance of coverage.
Types of Health Insurance
Health insurance plans can be broadly categorized into two main types: “public” and “private”.
- Public Health Insurance: These plans are funded by the government and typically include programs like Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) in the United States. Public health insurance aims to provide coverage for specific groups, such as the elderly, low-income families, and children, ensuring that vulnerable populations have access to essential health services.
- Private Health Insurance: These plans are offered by private companies and can be employer-sponsored or purchased individually. Employer-sponsored insurance is the most common form of private insurance, where employers provide health coverage as part of employee benefits. Individuals can also purchase private insurance plans directly from insurance companies or through health insurance marketplaces.
Key Features and Benefits of Health Insurance.
Health insurance provides several critical benefits that contribute to both individual and public health:
Financial Protection: One of the primary benefits of health insurance is to protect individuals from high medical costs. Without insurance, the cost of medical procedures, hospital stays, and prescription medications can be prohibitive, potentially leading to significant financial strain or bankruptcy.
Access to Healthcare Services: Insurance coverage increases access to a broad range of healthcare services, including preventive care, routine check-ups, specialist visits, emergency care, and surgeries. This ensures that individuals can receive timely medical attention, which can improve health outcomes and reduce the need for costly emergency interventions.
Preventive Care: Many health insurance plans cover preventive services at no additional cost, such as vaccinations, screenings, and wellness visits. Preventive care helps detect and manage health issues early, preventing more severe conditions and reducing overall healthcare costs.
Network of Providers: Health insurance plans often have networks of preferred healthcare providers, including doctors, hospitals, and specialists. These networks can offer discounted rates, helping reduce the cost of care for insured individuals.
Important Terms to Know in Health Insurance
Understanding health insurance involves familiarizing oneself with several key terms:
- Premium: The amount paid, often monthly, to maintain health insurance coverage. Premiums are required regardless of whether healthcare services are used.
- Deductible: The amount an individual must pay out-of-pocket for healthcare services before the insurance plan begins to pay. Higher deductibles generally mean lower monthly premiums and vice versa.
- Copayment (Copay): A fixed fee paid by the insured for specific services, such as doctor visits or prescriptions, typically after the deductible has been met.
- Coinsurance: A percentage of the cost of a healthcare service that the insured must pay after the deductible is met. For example, an 80/20 plan means the insurer pays 80% of the costs, and the insured pays the remaining 20%.
- Out-of-Pocket Maximum: The maximum amount an individual is required to pay for covered services in a plan year. After reaching this limit, the insurance company covers 100% of the costs for covered benefits.
Why Everyone Needs Health Insurance Coverage
Health insurance is essential for maintaining personal health and well-being. It reduces the financial barriers to accessing necessary medical care and encourages preventive services, leading to better health outcomes. Additionally, insured individuals are more likely to seek care early, manage chronic conditions effectively, and avoid the high costs associated with emergency medical interventions.
Looking at the big picture, health insurance contributes to the overall efficiency of the healthcare system. By facilitating access to preventive care and early treatment, health insurance helps reduce the burden on emergency services and minimizes the costs associated with untreated health conditions. Furthermore, by spreading the financial risk of healthcare across a larger population, insurance systems help stabilize healthcare costs and make services more affordable for everyone.
Health insurance plays a vital role in both individual and public health by providing financial protection, increasing access to care, and encouraging the use of preventive services. Understanding the different types of insurance, the benefits they offer, and the key terms associated with coverage can help individuals make informed decisions about their healthcare needs. As healthcare continues to evolve, the importance of comprehensive health insurance remains paramount in ensuring equitable access to quality care and protecting against the financial risks associated with medical expenses.
Resources:
MO HealthNet Division 1 mydss.mo.gov
Missouri Health Plans | Health Insurance Coverage (missouri-healthplans.com)
Healthcare Quotes and Information | FirstQuote Health
References:
- Understanding Health Insurance 101: A Comprehensive Guide. eHealth, 2024 Health Insurance 101 Guide | eHealth (ehealthinsurance.com) Health Insurance 101 Guide | eHealth (ehealthinsurance.com)
- Understanding Health Insurance Terms. Forbes Advisor. Forbes Media, LLC. 2024.
Health Insurance Terms Glossary – Forbes Advisor.
