Low Cost Health Insurance: What You Need To Know To Know What You Get

August 30th, 2010 | by linda smit |

What are you buying when you purchase health insurance, and how do you know if you are getting a good deal? The answers to these questions depend on your understanding a few basic health insurance concepts. Don’t worry, these are easy to grasp and well worth the time when you start shopping for the best, low cost health insurance. The point of this article is to help guide you through these basics so that you better understand what you are getting when you buy a health insurance plan.

One of the first things to understand is that when you purchase health insurance, just as with any kind of insurance, you are purchasing a sort of contract that guarantees you a specific set of benefits. In order to remain eligible to receive those benefits, you pay a recurring, monthly fee which is called a premium. The premium is the insurance company’s fee for managing the risk of your need for health insurance coverage. At bottom, all insurance is risk management, and you are essentially paying the insurer to assume the risk of payment for health care.

When you shop for health insurance, you discover that there are many different kinds and packages. For many people, health insurance means a coverage that pays the bills for doctor visits, outpatient hospital care, and inpatient stays. However, there are other kinds as well, such catastrophic health coverage, maternity coverage, and dismemberment insurance to name just a few examples. When you search for health coverage, you find an assortment of plans each offering its own package of benefits with its own rate of payment. The insurance plan is the “package” of benefits, and the benefits describe exactly what the insurer will pay for. For this reason, it is important that you understand the package so that you know what to expect when you receive health care.

Examples of different kinds of insurance plans offering different packages of benefits would include the health maintenance organization (HMO), preferred provider organization (PPO), and private fee for service plan (PFFS). An HMO is a kind of plan that includes a set menu of benefits, and your coverage–or health care–would be provided by doctors and hospitals in the plan’s network. By network, I mean those providers who have an agreement to offer care to the plan’s members. An HMO would assign you a primary care doctor and access to specialists and hospitals would require the primary care physician’s referral. HMOs are generally more satisfactory for people who generally have few medical demands and usually need only preventive care.

PPOs generally offer greater flexibility of coverage than HMOs. Whereas HMOs require that you receive care only from network providers, PPOs allow you to go out-of-network and do not require referrals. PPOs also include network providers (doctors and hospitals who have a contract to provide care to plan members), and care within the network will always be less expensive than going out-of-network. PPOs are often more expensive than HMOs but are generally considered to offer more coverage. You can see that if you understand you and your family’s needs, you can determine whether a less expensive HMO or the more expensive PPO would be appropriate. Even though a PPO may be more expensive, if it more adequately meets your needs, it may less expensive in the long run. Some examples of the big health insurance names you may encounter include United Health Care, Humana, Blue Cross, Blue Shield, Aetna, Cigna, Anthem, Tonik, Wellmark, and John Deere.

A PFFS plan is still a kind of managed care, but in the private fee for service plan, you go to any doctor or hospital you choose as long as they submit claims to insurance company and accept payment. In a fee for service plan, your health care providers would bill the insurance company a specific fee for each service provided. What the insurer pays is based on a fee schedule.

When you buy a health insurance plan, the actual cost of the plan is not only the price of the premiums, deductibles, co-pays and co-insurances. When you figure the real cost, you must also take into consideration the reliability of the company in living up to their promise of coverage for the kinds of services that are important for you and your family. Thus, a “cheap” plan could end up costing you more if the company doesn’t cover the costs specified in the policy. Humana, for example, may offer you less expensive plans, but if you have to argue with them over meeting the basic agreements in the policy, then the coverage would be useless and the cost to you far greater than you had imagined.

Low cost health insurance is attainable, but real secret is determining the benefits you need the most and then stripping everything else out of the policy. In other words, pay for as few services as possible and then add to that the highest deductible you think you could afford to pay if the need arose. Earlier, I mentioned the reliability factor. Do not buy a policy from a company until you get some idea of its customer service record. know before you go. Should a time of need arise, you want the security of knowing that the company will live up to its agreements.

Finding individual health insurance doesn’t have to be expensive. Find out more, today!

Financial Solutions