What Is Health Insurance & How Does It Work?
Millions of Americans are still confused about this topic, so we’ve decided to take the time and explain the basics in great detail. So sit back and get ready to get the answers to all of your burning questions.
What Is Health Insurance?
The concept may be self-explanatory, but health insurance encompasses the medical expenses for an individual or household. The term medical expenses refer to the following: illness, injury, emergency surgery, along with general health problems that can occur at any given time throughout the year.
Depending on your plan and the scope of the coverage, you might be required to pay for these medical expenses immediately at the hospital or doctor’s office. You then make a claim, and the insurance company provides a reimbursement. Although, some insurance companies these days don’t require you to pay upfront, saving you valuable time and money.
The term ‘provider’ is thrown around a lot and refers to a doctor, clinic, hospital, pharmacy, or a designated practitioner recognized under the regulations of the insurance company. A great example of a designated practitioner is a midwife, whose services are not universally covered under every policy.
When Was Health Insurance Created?
The concept of health insurance was established during the mid-1800s, as wealthy Americans wanted to protect themselves if they got extremely ill. The invention also coincided with the development of insurance, which aimed at protecting an individual’s assets in exchange for a regular payment.
Fast-forward to the present day, and the concept of health insurance remains intact. It’s no longer just for the ultra-wealthy, as middle class and low-income individuals and households now have access to some form of health coverage.
How Does Health Insurance Work?
The concept of health insurance is quite simple. You pay an insurance company on a regular basis, and they pool your money with other individuals, creating a vast sum of capital. Whenever you need to go to the hospital or take a trip to see your doctor, the insurance company siphons a bit of money to cover the costs of your visit.
It’s standard practice for an insurance company to charge an annual fee called a deductible. Furthermore, individuals are also charged a monthly fee referred to as a premium.
Before the Affordable Care Act, insurance companies could reject applications based on their ‘pre-existing conditions.’ This encompassed the elderly population and those who had recovered from a life-threatening illness. The insurance company viewed these individuals as a liability and refused them coverage. The ACA outlawed these practices and made sure all Americans (regardless of their medical histories) could purchase an affordable plan.
How To Get Health Insurance?
There are two main ways most Americans access an insurance program.
Through Your Employer
Many Americans obtain a health insurance plan through their employer. This is called job-based health insurance and most organizations in the US offer this to full-time employees. The way it works is that the employer covers a significant portion of the costs and the employee pays a small part of the premium every month through their paycheck.
Through the Affordable Care Act
The second option is through the Affordable Care Act, which is meant to provide coverage to all Americans who don’t have access to job-based insurance. When the bill was signed into effect seven years ago by President Barack Obama, all 50 states had to choose between using the federally facilitated marketplace or creating their exchange.
You can only purchase an Obamacare plan through during the Open Enrollment Period. For the 2018 period, it begins on November 1, 2017 and ends on December 15, 2017, providing 45 days for Americans to shop around and choose a plan.
How Much Is Health Insurance?
The cost of health insurance depends both on your needs and your location. Prices vary between counties and state boundaries, so it’s important to do some research beforehand before making a decision. We suggest speaking to one of our agents here at HealthQuoteInfo so you can fully understand all of your options and stay up-to-date with the latest news that may affect you.
What Is The Penalty For Not Having Health Insurance?
A contentious component of the Affordable Care Act is that it penalizes those who refuse to purchase a health insurance plan during the Open Enrollment Period. The penalty comes into effect when it’s time to file your taxes and varies depending on your state and the size of your household. Although most states use the following model:
Percentage of income
- 2.5% of your household income
- The maximum equates to the total annual premium for the national average price of a bronze plan sold through the marketplace.
You’ll pay whichever option is higher, and the fee rises according to inflation.
- $695 – per adult
- $347.50 – per child under 18
- Maximum – $2,085
The Bottom Line
It’s crucial to obtain some form of health insurance. If you have any questions regarding this subject matter, feel free to call one of our agents at 855-614-5057.