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PLATINUM GROUP NEWS & VIEWS

I'm perfectly healthy! Why do I need health insurance?

by Michael Murphy / October 30, 2014

Finding the right healthcare plan for you can be stressful and expensive, forcing people to be squeezed out of the system due to high costs. However, the Affordable Care Act was set in place this year mandating that most Americans - yes, even the young and healthy - purchase health insurance. 

Many people want and value quality health insurance but are unable to afford coverage or have been shut out from the marketplace because they have pre-existing medical conditions, according to research by the Kaiser Family Foundation. 

"Like auto insurance, health insurance is a service you pay for but hope you will never need. It's there for the unpredictable, unexpected and fundamentally uncontrollable problems that come up in people's lives," said Dr. Molly Cooke, a practicing internist who is president of the American College of Physicians and a professor of medicine at the University of California, San Francisco. 
 

Health insurance protects you from high, unexpected costs

No one plans to get sick or hurt, but most people need medical care at some point. Health insurance covers these sometimes unexpected costs and protects you from very high expenses - for instance, did you know the average cost of a 3-day hospital stay is $30,000? 

You may be healthy now, but the onset of a sudden or serious illness (cancer, diabetes) or a traumatic event (car crash, skiing accident) can leave you with staggering medical bills. The inability to pay high medical bills, one of the most common reasons people file for personal bankruptcy, can ruin your credit history and set you back for years.

You need access to preventive and primary care

The law requires insurers to cover annual checkups and preventive care – mammograms, vaccinations, colonoscopies, and prostate cancer screenings – without a co-pay. That means you're more likely to stay healthy and catch health problems early, when they're easier and less expensive to treat.

Policies also must provide a minimum standard of care known as essential health benefits in these categories:

  • preventive and wellness services
  • ambulatory (outpatient) care services
  • emergency care
  • hospitalization
  • maternity and newborn care
  • pediatric care
  • mental health and substance use disorder services
  • prescription drugs, and
  • rehabilitative and habilitative services (specialized therapies and medical equipment to help people facing long-term disabilities)

Even healthy, young people benefit from this kind of health insurance coverage.

"Contrary to popular belief, young adults have a need for preventive care, checkups and chronic disease management, whether they have asthma, diabetes or another condition," said Sarah Dash, a research professor at Georgetown University's Center on Health Insurance Reforms. 

Without it, you may have trouble getting follow-up care

Hospital emergency departments traditionally care for patients with urgent needs, such as broken bones or head injuries stemming from an accident, regardless of their ability to pay. "But your ability to get necessary follow-up care, rehab care or whatever service you need to get back as much full function as possible is going to require coverage or a fair amount of money," said Ellen Pryga, director of policy for the American Hospital Association.

 

How insurance protects you

Insurance coverage protects you from high medical costs in two ways:

  • Out-of-pocket maximum: This is the total amount you'll have to pay if you get sick. For example, if your plan has a $3000 out-of-pocket maximum, once you pay $3000 in deductibles, coinsurance, and copayments the plan will pay for any covered care above that amount for the rest of the year.
  • No yearly or lifetime limits. Health plans in the Marketplace can't put dollar limits on how much they’ll spend each year or over your lifetime to cover essential health benefits. After you've reached your out-of-pocket maximum, your insurance company must pay for all of your covered medical care with no limit.

People without health coverage are exposed to these costs. This can sometimes lead people without coverage into deep debt or even into bankruptcy.

How health insurance coverage works

When you have insurance, you pay some costs and your insurance plan pays some others. Here are some of the ways that the payments break down:

  • Premium: A premium is a fixed amount you pay to your insurance plan, usually every month. You pay this even if you don't use medical care that month.
  • Deductible: If you need medical care, a deductible is the amount you pay for care before the insurance company starts to pay its share. Once you meet your deductible, your insurance company begins to cover some costs of your care. Some plans have lower deductibles, like $250. Some have higher deductibles, like $2000. Many plans provide preventive services, and sometimes other care, before you've met your deductible.
  • Copayment: A copayment is a fixed amount you'll pay for a medical service after you've met your deductible. For example, after meeting your deductible you may pay $25 for a visit to the doctor's office that would cost $150 if you didn't have coverage. The health plan pays the rest.
  • Coinsurance: This is similar to copayment, except it's a percentage of costs you pay. For instance, you may pay 20% of the cost of a $100 medical bill. So you would pay $20 and the health plan would pay the rest.

 

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Michael Murphy

Michael Murphy

Michael is the founder of Platinum Group. His passion is in helping businesses to simplify their employee management and accounting processes.