Health Insurance Basics
No one enjoys being sick. Good health is the key to a good quality of life. In order to maintain your health, being able to afford medical care is a must. Medical treatments are becoming more and more effective in preventing sickness and injury, but the price can be staggering. To help cover these costs and get you back on your feet, there is health insurance. Here, we've outlined the basics of health insurance to help you get to know your coverage.
What Is Health Insurance?
Health insurance is a form of insurance that protects against sicknesses and injuries that result in large financial obligations, loss of wages, or loss of life. There are two basic categories for health insurance:
Private Health Insurance Plans
Private health insurance is a relationship between the subscriber and the health insurance provider, either directly or through an employer, union, or family member. The majority of health insurance in the United States is privately covered. Private insurance can be further broken down into two categories:
- Individual Insurance. When an individual applies for health coverage directly from a provider, he or she has individual insurance. During the application process, applicants are often screened for current and hereditary conditions, and coverage can be denied based on the results.
- Group Insurance. Group insurance describes most health insurance plans offered by employers or unions. There is usually no medical examination required for a group insurance plan. This means that those with existing conditions or with a family history of illness may be able to qualify for coverage even though on an individual basis, they would not. While the types of coverage offered by group insurance vary between employers, the four most commonly provided are:
Government-Sponsored Health Insurance Plans
As the name suggests, local, state and federal government programs fund government-sponsored health insurance plans. The most well-known government-sponsored health insurance programs are Medicare and Medicaid.
Understanding your health insurance coverage is an important first step to making knowledgeable choices for your financial future. We've only just scratched the surface of the complex system that is health insurance, so to make the best financial decisions, make sure you visit our planning section to learn more about the health insurance options that may be available to you. If you do not already have a health insurance policy, or if you aren't sure of your coverage, talk to your employer or consider a private insurance plan.