How Health Insurance works in USA ?
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If you are working in USA as a full time employee ( regardless of your status H1B, L1, F1 – OPT ) your employer is obligated to provide you a health insurance. But do you know ..
1. What is the health Insurance?
2. How to obtain that?
3. How it works? ?
4. Terms that you must know with health insurance plans
Reading this article will help you choose the right coverage for you and at least it will help you make informed decision when it comes to obtaining the health insurance coverage through your employer.
1. What is the health Insurance?
Health Insurance is nothing but an insurance that pays for individual medical expenses.
2. How to obtain that?
It may be purchased on a group basis by a company to cover its employees or purchased by individual consumers (very few people take individually since for most of them only employer will provide). In each case, the covered groups or individuals pay premiums or taxes monthly, to help protect themselves from high or unexpected healthcare expenses.
3. How it works?
A health insurance policy is a contract between an insurance company and an individual. The contract can be renewable annually or monthly. The type and amount of health care costs that will be covered by the health plan are specified in advance.
4. Terms which you will hear often with health insurance plans:
- Premium: This is the amount the policy-holder pays to the health plan each month to purchase health coverage. Usually employer pays 80% of the premium and 20% of the premium employee needs to pay. Premium amount will vary based on whether one has opted individual plan or a family plan. Usual premium amount (the 20% portion of employee) varies from $75 to $300. That said now you can imagine that getting a health insurance and paying the entire portion of health insurance all by yourself is really costly. But it does not mean that your employer is really spending heavily on monthly premium (80%) , when they (your employer in USA) purchase a medical insurance you are not the only one who would be getting coverage there will be many other employees like you hence employer gets a very good discount on the policy
- Deductible: This is the amount that the policy-holder must pay from his/her pocket before the health plan pays. Basically its share. For example, a policy-holder might have to pay a $500 deductible per year, before any of their health care is covered by the health plan. It may take several doctor’s visits or prescription refills before the policy-holder reaches the deductible and the health plan starts to pay for care.
Copayment: The amount that the policy-holder must pay his/her pocket before the health plan pays for a particular physician visit or service. For example, a policy-holder might pay a $45 copayment for a doctor’s visit, or to obtain a prescription. A copayment must be paid each time to obtain a particular service. - Coinsurance: Instead of paying a fixed amount up front (a copayment), the policy-holder must pay a percentage of the total cost. For example, the member might have to pay 20% of the cost of a surgery, while the health plan pays the other 80%. Because there is no upper limit on coinsurance, the policy-holder can end up owing very little, or a significant amount, depending on the actual costs of the services they obtain.
http://ind2usa.blogspot.com/search/label/Early%20days%20in%20U.S - Exclusions: Not all services are covered. The policy-holder is generally expected to pay the full cost of non-covered services out of their own pocket. When you obtain the insurance , the insurance company provides you the detail about what type of services are not covered, it is always better to ask to health insurance company what is not covered in order to avoid any late surprises.
- Coverage limits: Some health plans only pay for health care up to a certain amount. The policy-holder may be expected to pay any charges in excess of the health plan’s maximum payment for a specific service. In addition, some plans have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum and the policy-holder must pay all remaining costs.
- Out-of-pocket maximums: Similar to coverage limits, except that in this case, the member’s payment responsibility ends when they reach the out-of-pocket maximum, and the health plan pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.
Some health care providers will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn’t pay, later on they will send us the bill amount which needs to be paid if in case, insurance company rejects to pay for the part /whole of the service.
Types of medical insurance in U.S:
Health Maintenance Organization (HMO) Plan
Health Maintenance Organizations (Usually called HMO’s):
As an HMO member, you pay a monthly premium. In exchange, the HMO provides comprehensive care for you and your family, including doctors’ visits, hospital stays, emergency care, surgery, laboratory (lab) tests, x-rays, and therapy. Here your choices of choosing doctors and hospitals are limited to those that have agreements with the HMO to provide care. However, exceptions are made during emergencies or when medically necessary. There may be a small co-payment for each office visit, such as $5 for a doctor’s visit or $25 for hospital emergency room treatment.
HMO Advantages
- There is NO maximum limit on your out-of-pocket expenses.
- Many people like HMOs because they do not require claim forms for office visits or hospital stays. Instead, members present a card, like a credit card, at the doctor’s office or hospital.HMO Disadvanges
- With HMO plan you may have to wait longer for an appointment than you would with a fee-for-service health insurance plan.
- In almost all HMOs, you either are assigned or you choose one doctor to serve as your primary care doctor. This doctor monitors your health and provides most of your medical care, referring you to specialists and other health care professionals as needed. You usually cannot see a specialist without a referral from your primary care doctor who is expected to manage the care you receive. This is one way that HMOs can limit your choice.
- You must live and reside within the H.M.O. service area.
- Moving could result in loss of coverage.
Before choosing an HMO, it is a good idea to talk to people you know who are enrolled in the one you are considering. Ask them how they like the services and care given.
Point-of-Service Plans (Usually called PPO):
Like an HMO, there are a limited number of doctors and hospitals to choose from. When you use those providers (sometimes called “preferred” providers, other times called “network” providers), most of your medical bills are covered.
When you go to doctors in the PPO, you present a card and do not have to fill out forms. Usually there is a small co-payment for each visit. For some services, you may have to pay a deductible and coinsurance.
Point of Sevice or PPO
Advantages of PPO
- As with an HMO, a PPO requires that you choose a primary care doctor to monitor your health care but referral are not absoultey necessary to see a specialist doctor.
- Most PPOs cover preventive care. This usually includes visits to the doctor, well-baby care, immunizations, and mammograms.
- In a PPO, you can use doctors who are not part of the plan and still receive some coverage. At these times, you will pay a larger portion of the bill yourself (and also fill out the claims forms). Some people like this option because even if their doctor is not a part of the network, it means they do not have to change doctors to join a PPO.Disadvantage
- More paperwork and out of pocket expense.
Managed Care
Policy holder receives approval from their insurance company before one should be admitted to make sure that the hospitalization is needed. If we go to the hospital without this approval, we may not be covered for the hospital bill.
Fee-for-Service Plans:
Insurance companies pay fees for the services provided to the insured people covered by the policy. This type of health insurance offers the most choices of doctors and hospitals. You can choose any doctor you wish and change doctors any time. You can go to any hospital in any part of the country.
With fee-for-service, the insurer only pays for part of your doctor and hospital bills. You pay a monthly fee, called a premium.
A certain amount of money each year, known as the deductible, is paid for by you before the insurance payments begin. In a typical plan, the deductible might be $250 for each person in your family, with a family deductible of $500 when at least two people in the family have reached the individual deductible. The deductible requirement applies each year of the policy. Also, not all health expenses you have count toward your deductible. Only those covered by the policy do. You need to check the insurance policy to find out which ones are covered.
After you have paid your deductible amount for the year, you share the bill with the insurance company. For example, you might pay 20 percent while the insurer pays 80 percent. Your portion is called “coinsurance”.
To receive payment for fee-for-service claims, you may have to fill out forms and send them to your insurer. Sometimes your doctor’s office will do this for you. You also need to keep receipts for drugs and other medical costs. You are responsible for keeping track of your own medical expenses.
There are limits as to how much an insurance company will pay for your claim if both you and your spouse file for it under two different group insurance plans. A coordination of benefit clause usually limits benefits under two plans to no more than 100 percent of the claim.
Note:
- In general you can return any product in U.S with in certain period based on terms and conditions of the store from where you buy the product. But we can’t return medicine once you bought, some times they will take the medicines if you don’t use any of them.
- After you visit the doctor you will get the bill through mail which includes total bill amount and from that total amount how much insurance has paid and how much is your part. In some cases insurance won’t cover whole amount (eg: Doctor visit, laboratory charges). So individual needs to pay the minimum co-payment depends on the service provided.
Other Useful tips
Normally, the health insurance plans dont cover dental and vision expenses. You may have to go for separate insurances for each of them.
Most of the health insurance plans do not cover plastic/cosmetic surgery. I also dont know who gives a perfect coverage for them.
Lastly we would say, the most important things to consider while deciding upon a health insurance plan;
- Employer group coverage vs. individual/individual family plan
- HMO vs. PPO
- Your family size (with age groups), if any
- Pre-existing condition (chronic disease, if any)
- The doctors/facilities in the neighborhood
- Your affordability
If you are planning for a baby in near future, then you need to be extra careful while selecting the best plan for you. Before buying the plan, you may need to talk to the customer service of the insurance company and discuss with them regarding the OB/GYN, childbirth and post-natal care coverage.
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