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What is health insurance?
Health insurance is when a bunch of people under the same plan contribute money that goes into a huge pool of money that is used whenever someone under that plan needs medical help.
How does health insurance work?
Every month, you pay a certain amount of money according to the plan you have with your provider which is called your premium.
You can’t actually receive any money from your provider until you pay something called a deductible. A deductible is the amount you have to pay for a health care service before your provider starts to share costs with you.
There is also something called coinsurance which is the percentage you have to pay from the amount left after you paid the deductible. It’s the insurance providers’ way of having you share costs with them. Coinsurance is also known as allowed amount, eligible expense, payment allowance, or negotiated rate.
Premiums, deductibles, coinsurance, and copays vary with the health insurance plan you are under and what health service you are seeking. Also, the lower your premium, the higher your deductible, coinsurance, and copay and vice versa.
What health insurance plans exist?
There is the PPO, HMO, EPO, or POS plan.
Under the HMO and EPO plans, you are required to have a designated primary care provider, who you can only pick from a network of people. If you need specialists or procedures, those may be referred to you by your primary doctor, and those referrals must also be in-network except in emergencies. These plans are cheaper.
Under the PPO and POS plans, you don’t have to have a designated doctor or stay in-network, but this option is more expensive.