Howdy Wall St. Willy! When I went to the doctors’ they asked me for my health insurance. But what is health insurance anyway?
Health insurance is insurance that covers health related expenses like a doctor’s visit, hospitalization, medicines and many more. But to get this facility you have to pay a certain amount to the health insurance company on an ongoing basis which is called a premium.
Is the premium the same for everyone?
No, it is different for everyone and can depend on many factors like the kind of insurance you buy, your age, your health condition, your employer and many more.
Well what are the different kinds of health insurance?
Health insurance can be broadly classified into two types. One has a deductible and the other has a co-pay.
The deductible one is where you need to pay the expenses up to a certain amount every year. For e.g., $2000 before the insurance company starts paying for your medical bills. For example, if you have $2000 of hospitalization, you’d have to pay all of that $2000 but if you have anything after that then the insurance company will pay for it because you have already paid your deductible.
In copay, you have to pay a certain amount every time you visit a doctor or a hospital. For example, if the copay was $50 and the doctor visit costs $200, you’d pay $50 which is the amount of the copay and the insurance company would pay $150.
Would the insurance company pay all of the medical bills even if it’s a lot of money?
There might be a maximum on the amount the insurance company would pay in a year plus there might also be an upper limit on each category of expense.
For e.g., a health insurance policy might say that the hospital room that you have could not be more than $200 per night. If it’s more than $200 per night the insurance company would only pay $200 and you would pay the remaining amount.
Is your premium returned by the insurance company if you don’t fall sick or don’t visit a doctor?
No. You don’t get back the insurance premium if you don’t use the insurance.
Does the health insurance premium go up if you fall sick a lot?
No. The premium will not change based on how often you use the insurance.
Well, who should buy health insurance?
Everyone should have health insurance to protect themselves from the financial impact of healthcare related expenses.
Well, where can I buy health insurance?
Most companies offer health insurance to their employees at a specially negotiated rate as a part of the benefits package.
But, if your company does not offer health insurance or you are self-employed, you can buy health insurance yourself. But we’ll cover that separately in another video.
How long is health insurance valid for?
Health insurance is usually valid for one year.
Well, when can I buy health insurance?
Health insurance is usually bought during a time called the open enrollment period, which is usually between October and December. During this time the insurance can be bought for the following year. For e.g., in October and December 2018, you’d buy health insurance to cover the entire year of 2019.
Are there any expenses that most health insurance companies do not cover?
Yes, many health insurance policies do not cover the procedures that are not medically required. These are elective procedures, like cosmetic surgery. Some pre-existing illnesses are also not covered.
Health insurance also does not cover the treatment of your teeth or eyes as we have to buy a separate dental and vision insurance for that. But that’s a topic for another time.
Thank you very much for telling me about health insurance, Wall Street Willy.
You are welcome, Sooper Cooper. Remember, Finance is Your Friend!
Podcast: What is Health Insurance
All you need to know about the basics of Health Insurance: what is health insurance, is the health insurance premium the same for everyone, what are the different kinds of health insurance, does the insurance company pay all the medical bills even if it’s a lot of money, is the premium returned by the insurance company if you don’t fall sick or don’t visit a doctor, does the health insurance premium go up if you fall sick a lot, who should buy health insurance, where can you buy health insurance, how long is health insurance valid for, when can you buy health insurance, are there any expenses that most health insurance companies do not cover, and more.
Show notes and transcript at: https://easypeasyfinance.com/what-is-health-insurance/