A Simple Guide to Navigating Health Insurance

Health insurance pays for medical, surgical, and sometimes dental expenses for covered individuals or insured family members. Health insurance can reimburse the insured, or pay the care provider directly. Most Americans receive health insurance as employer benefit packages, with premiums often deducted from employee paychecks. The cost of health?insurance premiums?is deductible for the employer, and the benefits are paid tax-free.

Health insurance is available in many forms

For example, managed care plans require policyholders to receive care “in-network” from designated healthcare providers. If patients seek care “outside of the network”, they must pay a higher percentage of the cost or even be denied coverage.

• Health Maintenance Organizations (HMOs)– Patients choose a primary care physician (PCP) to oversee the patient's care, make recommendations about treatment, and provide referrals for medical specialists in-network.
• Preferred-Provider Organizations (PPOs)– Do not require referrals but have lower rates to encourage using in-network practitioners and services and higher costs for out-of-network.
• Point of Service Plan (POS)– Combines the features of an HMO and a more flexible PPO arrangement requiring a PCP and referrals to see specialists with lower costs to stay in-network, but higher costs when going out-of-network.
• Exclusive Provider Organization (EPO)– Does not require PCP or referrals to see doctors or specialists in-network but offers no out-of-network coverage except in case of emergencies.

Health insurance usually requires a number of “out-of-pocket” cost-sharing measures from the insured beyond the monthly premium payments

• Co-pays: required fees paid for services when received such as doctor visits and prescription drugs.
• Deductibles: costs paid by the insured before the health insurance will pay for a claim.
• Coinsurance: percentage of healthcare costs paid as part of the insurance coverage (often 80/20) beyond the deductible and until the out-of-pocket maximum is reached for the annual period.

Insurance plans with in-network care will help keep these costs down. The trade-off of higher out-of-pocket costs will come with lower premiums and are often more appropriate for young, healthy, and single insureds who anticipate less use of health coverage. Conversely, insureds who anticipate higher usage based on age, health, or family circumstances should consider the balance of higher premiums with lower out-of-pocket costs.

You’ve most likely heard of health insurance, life insurance, long-term care insurance, and disability insurance, but what do you really know about all the different types of policies? I invite you to listen to my podcast, Retirement Genius. In this episode, I break down the importance of each type of insurance available. I also share what people need to know when it comes to having the proper coverage.