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Course: Financial Literacy > Unit 6
Lesson 3: Health insurance options and costsIntroduction to health insurance
Navigating the world of health insurance can be overwhelming, but being informed about different options and understanding the benefits of having coverage can protect you and your family from unexpected medical expenses, while promoting a healthier and worry-free life.
The purpose and benefits of health insurance
Health insurance is important because it helps people pay for medical care. If you don't have health insurance, you may have to pay the entire cost of your medical care out of your own pocket. This can quickly become very expensive, especially if you have a serious illness or injury. Health insurance protects people from having to pay large medical bills all at once. Instead, they pay monthly premiums, and the health insurance company helps cover the costs of their medical care.
Why do we need health insurance?
Imagine you suddenly get sick and need to see a doctor. Without health insurance, you might have to pay hundreds or even thousands of dollars for your visit and any tests or treatments you need. But with health insurance, you pay a smaller amount, called a premium, every month, and the insurance company helps cover the rest of the cost. This way, you don't have to worry about large medical bills, and you can focus on getting better.
Health care challenges in the United States
Unfortunately, the U.S. health care system has some problems. Health care costs are rising, which means insurance premiums are getting more expensive. Not everyone can afford insurance, and some people don't have access to good medical care. Also, the quality of care you receive can vary a lot depending on where you live and what doctors you see.
The Affordable Care Act (ACA)
To help fix some of these problems, the U.S. government passed a law called the Affordable Care Act (ACA) in 2010. The ACA made a lot of changes to the health insurance market to make it easier for people to get insurance and to improve the quality of care. Some of the main parts of the ACA include:
The individual mandate
This part of the law says that most people have to have health insurance or pay a fine.
Health insurance exchanges
These are online marketplaces where people can compare and buy health insurance plans.
Subsidies
The government gives money to some people to help them pay for their insurance premiums.
Essential health benefits
All insurance plans have to cover certain services, like doctor visits and prescription medications.
Pre-existing condition clause
Insurance companies can't refuse to cover people or charge them more because they have health problems.
Types of health insurance
There are many different types of health insurance, and they all have their own costs and benefits. Here are a few examples:
Individual health plans
Individual health plans are insurance policies that you buy on your own, instead of getting them through your job or the government. They can be bought on the health insurance exchanges created by the ACA or directly from insurance companies. The premiums (the amount you pay each month) can vary, and you might have to pay a deductible (a certain amount of money) before the insurance starts to help with your medical bills.
Individual health plans often offer the most freedom in choosing healthcare providers because they are not tied to a specific employer or government program, which may have a limited network of providers.
Employer-provided health plans
Many people get health insurance through their jobs. Employers usually pay part of the premium, so these plans can be more affordable than individual plans. However, you might have fewer choices when it comes to the doctors you can see and the services that are covered. Another drawback is, if you leave your job, you might lose your insurance.
Government-provided health plans
Government-funded health insurance plans are programs that help people get the medical care they need. There are several common plans that you might have heard of, like Medicaid, Medicare, CHIP, Tricare, and veterans' healthcare.
Medicaid helps low-income families and individuals get access to doctors and hospitals, while Medicare is for people who are 65 and older, or have certain disabilities.
CHIP stands for the Children's Health Insurance Program and provides coverage for kids whose families earn too much for Medicaid but not enough to afford private insurance.
Tricare is a health benefit for active military members, their families, and retired veterans, making sure they get the healthcare they deserve for serving our country.
These programs usually have low or no premiums and deductibles, but they might not cover everything or let you see any doctor you want.
Comparing health insurance plans
When you're looking at health insurance plans, it's important to think about the costs and benefits of each one. Some things to consider include:
- Premiums: How much will you have to pay each month?
- Deductibles: How much will you have to pay before your insurance starts to help?
- Co-pays and co-insurance: How much will you have to pay when you see a doctor or get a prescription?
- Network: Are your favorite doctors and hospitals part of the insurance plan's network? Being in network means they have agreements with the insurance company to provide care at lower costs.
- Out-of-pocket maximum: What's the most you'll have to pay in a year for medical expenses?
Health insurance in action
Let's look at some examples of how different types and sources of health insurance work in different situations:
- Scenario 1: You have a job with great insurance. Your employer pays most of your premium, and you only have a small co-pay when you see the doctor. If you get sick, your insurance covers most of the cost, and you don't have to worry about a big medical bill.
- Scenario 2: You're a college student with an individual health plan. Your premium isn't too high, but your deductible is
- Scenario 3: Your family is on Medicaid. You don't have to pay a premium, and your deductible is very low. However, not all doctors accept Medicaid, so you might have to travel farther to find one that does.
Health insurance can be confusing, but it's important to understand the basics so you can make the best choice for yourself and your family. Remember to compare the features and coverage of different insurance plans, and think about how they'll work in different situations. That way, you can stay healthy and protect yourself from big medical bills.
Want to join the conversation?
Is it illegal for hospital to refuse treatment to anyone without insurance?(10 votes)
Generally it is illegal for a hospital to refuse treatment to a person without insurance, but the "level of treatment" might vary considerably. It may be considered perfectly legal to refuse treatment beyond what is needed to get you safely out the door and back home. Do not show up, uninsured and needing a heart transplant, at ANY hospital.(9 votes)
hey uh its crazy how expensive health insurance is fr like on the gang(5 votes)- Yes. Health insurance is expensive. But, compare it to going without health insurance at all, and needing some kind of medical procedure. You'll see that it is worth what it costs.(1 vote)
You're basically paying them to keep you alive. Also you're paying the same amount in the end.(2 votes)- I believe the part about there being a requirement/mandate for people to have insurance otherwise they will pay a fine is out of date.
The fee for not having health insurance (i.e. the mandate) ended in 2018 and people no longer pay a tax penalty for not having health coverage, right?
Source:
https://www.healthcare.gov/health-coverage-exemptions/exemptions-from-the-fee/(2 votes) 
You're basically paying them to keep you alive. Also you're paying the same amount in the end.(2 votes)
Well, technically if you get hurt many times and maybe would have to pay twenty thousand dollars per year, insurance would be cheaper.(1 vote)
- what if you have a job and thay wont pay your premiums insurance plan what then/(2 votes)
- In a case like that, you are working for the wrong employer. Look for a different job.(0 votes)
- Isn't it unethical to FORCE me to pay health insurance by making me pay a fine if I don't have it? Shouldn't it be MY choice whether I have health insurance or not? Also, that seems like someone from the insurance companies slipped some money into a government official's pocket.(2 votes)
Unethical? Maybe. Illegal? No. Your choice? No.(1 vote)
- What's the difference between an out-of-pocket maximum and a deductible?(1 vote)
- The deductible is a hurdle you need to cross early in the year, while the out-of-pocket maximum is a safety net that limits your overall spending on covered healthcare.(1 vote)
- really interesting but how(1 vote)
- You buy insurance to cover bad things that might happen. If something bad DOES happen, your insurance pays. That's how it works.(1 vote)