Understanding Health Insurance

Help for Understanding Health Insurance

This section is about understanding health insurance … the kind of health insurance that covers doctors and hospitals. It’s the kind that is frequently offered at work, although individual policies are also available. Other names for this coverage are Comprehensive, Major Medical or Obamacare. Some policies may also cover Dental or Prescription Drugs, which we’ll cover separately.

Health insurance helps you with the high cost of medical care in two ways. First, by providing coverage for specific health care services.  The second is probably most important. Most plans today have contracted rates with doctors, hospitals, and labs that are much lower than you can get on your own. Although you generally pay a monthly premium, deductibles and either co-payments or co-insurance, the cost for insurance is far less than medical care would be if you paid it all yourself (out-of-pocket). At the same time, health insurance protects you from the overwhelming cost of a major illness or injury.

Most health insurance policies will cover minor ailments and checkups, but it’s the main benefit is to cover major illnesses or accidents.  It’s not fun paying a $150 bill doctor bill, but most of us can handle it.  Health insurance is more important for the $10,000 broken leg bill, $85,000 average lifetime cost of diabetes, or the $125,000 cancer bill.

Understanding health insurance has become much more difficult with the Affordable Care Act (ACA), nicknamed Obamacare, and all of the political bluster associated with it.  The ACA mostly affects how we buy health insurance and some of the basic coverage.  We’ll cover Obamacare in a different section.

We have provided brief descriptions for medical care paid through a government program such as Medicare, Medicaid, and the Veterans Administration (VA). Additional information is available on various government websites.

Health insurance is the most difficult type of insurance to understand.  This section will provide basic explanations of the important topics in as simple language as we can.  Since a lot of this is legalese, we have some of the more technical definitions here.