Health insurance is a legal contract that requires an insurer to pay some or all of an insured’s medical expenses in exchange for a monthly premium. It is designed to protect enrollees from financial ruin in case of an expensive medical crisis.
The types of coverage offered by a health plan can vary greatly, so it’s important to assess your needs before choosing a plan. Typically, health insurance plans will offer a set of essential benefits like prescription drug coverage, hospitalization and doctor visits. Moreover, some of them will also provide income benefits for work time lost due to illness or injury.
Cost is often the first factor that people consider when selecting a health insurance policy, but it’s important to look at other factors as well. For instance, the annual out-of-pocket maximum is a key factor for many people. This is the amount of cost sharing (deductibles, copays and coinsurance) you will be responsible for in a year before your insurance starts to pay 100% of costs. This limit can vary by plan, so it’s important to review the fine print to make sure you understand how much your coverage will really cost.
You should also compare the different options in terms of coverage type, deductibles and other out-of-pocket costs. For example, HMOs usually have lower premiums but may come with restrictions on which doctors they’ll cover. PPOs on the other hand, generally have higher premiums but give patients more flexibility to see out-of-network providers without a referral.
In addition, it’s worth looking at how a health insurance company treats its customers. This can be assessed through metrics like customer complaints and J.D. Power’s customer satisfaction ratings.
Historically, the details for health insurance have been left to individual states to regulate. However, since the Affordable Care Act went into effect, the federal government has established guidelines that all insurers must follow when selling plans on the marketplace or through private channels.
Aside from the ACA regulations, some state laws and insurers have additional rules that influence how health insurance works. For example, some states have restrictions on what insurers can charge for certain types of health services or how they calculate premiums. Others have regulations that limit when enrollees can change their plans, such as by requiring an annual open enrollment period or limiting special enrollment periods for specific life events.
It’s also important to check how your state’s health insurance regulations compare to those of other states before choosing a plan. This can help you determine if your state has the most robust protections or if it has weaker consumer safeguards. For example, New York has some of the strongest consumer protections in the country, including a rule that prevents insurers from using a person’s age or health status to increase their premium. This is in contrast to other states, which often allow these factors to play a role in determining a person’s premium. In addition, New York prohibits insurers from charging a higher premium for people who smoke or are older than 50.