Health care in the United States can often be very expensive. A single visit to the doctor can cost several hundreds of dollars, and an average three-day stay in hospital can result in being charged tens of thousands of dollars or more, depending on the type of care that is received. Most people are unable to pay such large sums of money when they get sick, as there’s no way of telling when we are going to become ill or injured, or what type of care we are going to need. In the USA, health insurance provides a way to reduce such costs into more reasonable and affordable amounts. If you’re new to the USA and want to learn more about how the health care system works, read on to find out more.
How Does Health Insurance Work?
Typically, health insurance allows the consumer to pay a certain amount upfront to a health insurance company, a payment that then allows the consumer to share ‘risk’ with many other people, known as enrollees, who are also making similar payments. Due to the fact that most people are healthy for the majority of the time, the premium dollars that are paid to the insurance company can be used in order to cover the expenses of the relatively small amount of enrollees who become sick or injured. As you can imagine the vast majority of insurance companies have carried out an extensive study of risk, and their main goal is to gain enough premium in order to cover the medical costs of all the enrollees. In the United States, there are many different types of health insurance policies and many different rules and arrangements regarding patient care.
Where Can I Receive Care?
One of the ways in which health insurance companies control their costs is to influence access to health and care providers, including hospitals, physicians, laboratories, pharmacies, and other entities in the medical field such as home care agencies who use home health billing software. Many insurance companies set up contracts with a specific network of providers who have agreed to supply services to enrollees on the plan at discounted prices. If a provider is not in the plan’s network, the insurance company may refuse to pay for the services provided, or may agree to pay a smaller amount than it usually would for care within the network. This means that enrollees who go outside of the network or health care may be required to pay a higher share of the cost.
What is Covered?
Under the Affordable Care Act, the healthcare reform in the United States has introduced more standardization to the benefits of health insurance plans. Before this standardization occurred, the benefits of health insurance plans varied drastically from plan to plan. For example, whilst some plans cover prescriptions for medication, others did not. Today, health insurance plans in the USA are legally required to cover a number of essential health benefits including emergency services, hospitalization, laboratory tests, maternity care, mental healthcare, substance abuse treatment, outpatient care, pediatric services, prescription medication, rehabilitation services, and preventative services such as vaccinations.
How Much Does It Cost?
It is actually quite complicated to understand exactly how much health care insurance in the USA will cost. Initially, you will be required to pay an upfront premium payment that will be transparent to you. However, for most plans this will not be the only cost that is associated with the care received. Typically, costs will be incurred when you access care, although the more that you pay upfront as premium, the less you will need to pay each time you access care. The less you pay in a premium, the more you will be required to pay when you access care.
- Out-of-pocket Expenses – The portion of your medical care costs that you are responsible for paying when you receive care.
- Annual Deductible – The amount you are required to pay each year before the insurance company begins to pay its share.
- Copayment – A fixed amount that is paid upfront each time that you receive care. Plans with a higher premium will typically have lower copayment amounts.
- Coinsurance – A percentage of your healthcare costs. For example, you may pay 20% of the cost whilst your insurance company pays 80%.
- Annual Out-of-pocket Maximum – The total of your deductible, copayments, and coinsurance that is the maximum amount you will be required to pay per year, not including premiums. Once the limit is reached, your insurance company will cover 100% of your costs for the remainder of the year.
Are you a US citizen? How do you pay for your health care? We’d love to hear from you in the comments.