Just What Is Health Insurance

One question that many people ask is "do I really need health insurance or can I live without it?" This is not always an easy question answer and the answer often depends on who you ask.

As with most types of insurance, it could be said that you don't really need it until you need it. Car insurance, for example, doesn't do you any good until you have a car accident. Life insurance doesn't do you any good until you die. Similarly, health insurance doesn't do you any good until you a sick. If however you believe in Murphy's Law - that whatever can go wrong, will go wrong - then you should probably think about getting health insurance.

In many countries such as England, France, Canada, Sweden and Norway health insurance is not an issue as medical care is provided free of charge and doctors and hospitals are reimbursed by the government.

In the United States however the vast majority of healthcare costs are covered by insurance and there are three basic forms of health insurance:

1. Self-Insured or Uninsured. Here an individual either has no insurance or has health insurance but is responsible for paying 100% of the insurance premium. It is estimated that at least 30% of the population of the United States falls into this category.

2. Managed Care Plans. Managed care plans, which are essentially networks providing contracted service by specified providers at contracted prices, fall into three categories:

i. Health Maintenance Organizations (HMOs) are pre-paid plans for which members pay a fixed monthly premium. HMOs provide medical services ranging from visits to the doctor's office to hospitalization and surgery and normally require you to seek treatment from a designated network of healthcare providers.

ii. Preferred Provider Organizations (PPOs) are composed of groups of doctors and healthcare facilities which provide medical services to a specified group. Members of PPOs typically pay for services as they are provided and are then subsequently reimbursed for the costs of treatment. In the majority of cases services are provided at a price which has been previously negotiated by the healthcare provider and the PPO.

iii. Point Of Service (POS) is a form of managed healthcare system in which you pay a minimal co-payment and no deductible when health care is provided within your network. You are however free to seek treatment outside of the network but, should you decide to do so, you'll be required to pay additional charges and possibly a deductible.

3. Indemnity Plans. Indemnity plans allow policyholders to seek medical treatment whenever and wherever they choose. The major benefit of indemnity plans lies in the freedom of choice that it gives to policyholders but this freedom also makes indemnity plans the most expensive form of health insurance.

The type of plan that is right for you will depend very much on your personal circumstances and choosing a health insurance plan is a time-consuming task. Nevertheless, health insurance is something which we all need to consider sooner or later.

What you pay for insurance will often depend on where you buy it. For example, low cost California health insurance may well come at a very different price from low cost health insurance purchased in Florida.

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