How Health Insurance Works
The health insurance space in the U.S. is particularly intricate since there are both regional and national providers with significant differences based on coverage, pricing, and availability depending upon your location. After all, whether you are getting it as a job perk or buying it independently, you must know how health insurance works.
Employer-Based Health Insurance
A majority of the U.S. populace (over half) gets health insurance via employer-sponsored programs. As a result, the employer typically picks up some of the premiums, reducing the cost to employees for insurance. Employer costs are tax-deductible, and generally, the health benefits are not taxed to employees (with a few exceptions, notably for S corporation employees).
Self-Employed and Freelancers
This places the onus more upon self-employed policyholders, like freelancers and gig workers (blog), when purchasing individual health insurance. Fortunately, the Affordable Care Act (ACA) established in 2010 has a remedy, the ACA Health Care Insurance Marketplace. The online marketplace for comparison and buying private health insurance from insurers offered in a state or county through HealthCare.gov
A top advantage of the ACA is its function to reduce the price for men and women plus people using rates. The subsidies are offered to taxpayers with incomes between 100% and 400% of the federal poverty level, which enables health insurance to be affordable for poor families.
Medicare and Medicaid: Public Health Programs
Health insurance coverage for certain groups is available through federally subsidized programs.
- Medicare: Eligibility for this program is limited to people age 65 or older as well as certain disabled persons, those with ESRD (End-Stage Renal Disease), or ALS. They range from hospital stays to prescription drug coverage.
- Medicaid: This would include Medicaid for families and individuals right above the poverty line, which is essential access to care. Free application (no cost to apply): Medicaid is jointly funded by the federal and state governments. Medicaid in each state has different Medicaid eligibility requirements.
The Importance of Health Insurance
Health insurance is an essential tool for managing the often-exorbitant costs of medical care. An illness or injury could then bankrupt even those with minor health issues. One of the benefits is that you can seek necessary medical intervention and preventive care without having to pay from your pocket ridiculously high out-of-pocket services, so-called health insurance. With health insurance, the time between diagnosis and treatment reduces drastically; this starts with the shopper directly.
Moreover, most plans offer services like vaccines, tests, and routine check-ups, which help identify health problems before they escalate.
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Conclusion
Savvy spending on health care starts with understanding how health insurance works in the U.S., including what it will cost you, whether through your employer, independently, or via a public program like Medicare or Medicaid. Because the health insurance system is so variable between location, job status, and income, identifying the plan that’s most suited to you requires investigating every plan where you live.
