Health Insurance Articles
What To Know When Buying A New Health Insurance Policy
2010-08-08
Health insurance can seem complicated to many people, especially when considering buying a new insurance policy. There are a multitude of different plan types, coverage and limitations can vary dramatically between policies, and the out-of-pocket expenses under different policies can be hard to understand. Having a basic understanding of how health insurance works will go a long way toward making your final decision less stressful.
Today, health insurance comes in a variety of different plan types. However, the many different types of plans generally fall into two, broad categories: indemnity plans and network plans. Indemnity plans reimburse you a percentage of your costs after you receive medical services. Many of these plans are known as 80-20s, meaning the plan pays 80 percent of the costs, and you pay the remaining 20 percent. These plans usually also require an annual deductible that you must pay before you qualify for benefits. Network plans operate on a completely different payment model. With these plans, doctors are paid a flat fee upfront for providing you all the medical care that you might need over a period of time, regardless of the care you actually consume. You will make a small co-payment to the doctor at the time of the visit, but you will not be billed for anything else.
Another important consideration when buying a new insurance policy is the plan's coverage limitations and exclusions. Optimally, health insurance should cover all of your medical needs. However, in order to keep the policy affordable, coverage may be limited, and some treatments may be completely excluded from coverage. For instance, many health insurance policies limit mental health services to a specified number of visits per year. Other policies may exclude coverage for pre-existing conditions or may institute a waiting period before covering treatments for pre-existing conditions. You would not buy a car without knowing whether the four tires were included. Why would you purchase health insurance without knowing what is covered by your new insurance policy?
Finally before buying a new policy you must understand fully what your out-of-pocket expenses will be. If you are looking into an indemnity plan, your expenses will come in two forms: the annual deductible that you must pay before benefits start, and the percentage of all expenses not covered by the plan. On the other hand, your out-of-pocket expenses under a network plan will be all of the co-payments that you will need to pay each time you seek a medical service. Out-of-pocket expenses will often be a major deciding factor in finding a new insurance policy that meets your needs.
