Health Insurance 101 – Understanding Your Options

Health insurance or healthcare insurance is an important kind of insurance which covers a particular portion or the entire risk of an individual incurring medical costs. As with most other forms of insurance, however, there is financial risk on all sides. For this reason, health insurance policies often have to be renewed periodically to ensure that the insurance company can cover the costs of medical care that are required in the future. The renewal process is referred to as premium payment.

Health insurance or health care insurance is most commonly purchased by people who work for a company and its benefits include medical coverage for themselves as well as their families. However, there are some people who do not work for an organization but own their own business that require them to purchase health insurance for their employees. These employees belong to the private health care insurance category. Health insurance for self employed individuals is usually sold to these business owners through a contract that allows the insurance company to set premiums and deductibles. In exchange for the premium payments, the insurance company takes on the risk for medical care costs incurred by the employee. Although it is much more expensive than the other types of health care insurance plans, some people prefer self employed health care insurance because of the peace of mind that comes from knowing they have a reliable source of health care insurance in the event that an unexpected health emergency arises without any advance notice from the employer.

People who are unemployed and do not have any other option for health care coverage can also avail of other options that provide for financial security without being offered health insurance premiums by the employer-sponsored. Some people who are self-employed and have obtained group coverage from their workplace choose to self-fund their own health insurance policy. By paying a portion of their medical care costs, these self-employed individuals reduce the amount of money the employer pays for medical care costs and can enjoy greater control over their health insurance.

Having a health insurance plan from a state-licensed health insurer allows you to get timely medical care benefits, especially when you experience a major health problem. The state-licensed health insurer will file your claims on your behalf and will be the one to pay for your medical care. It is much more convenient than having to go to a health insurance company office to file your claim and handle the technicalities of submitting the claim. You should be familiar with your state health insurance plan rules and regulations.

If you have a job that offers flexible hours or gives you the choice to work as much or as little as you want, you may want to consider using your Flexible Spending Account (FSA) or Health Saving Account (HSA) to pay for your private health insurance plans instead of relying on employer-sponsored health insurance plans. Both of these accounts have tax advantages and are popular with self-employed individuals and people who are not eligible for government health plans. The main difference between a Flexible Spending Account and an HSA is that the FSA has an extremely low annual contribution rate while the HSA requires an upfront deductible and an average annual contribution of $532. The advantage of having a Flexible Spending Account compared to an HSA is that the account can be used to pay for routine medical bills and deductibles while the HSA can be used for major medical bills and deductibles. Also, both types of accounts have the option of transferring the money you save into a high interest savings account.

In addition, if you are employed and are offered a health insurance card, you may want to use this card instead of your employer-sponsored health insurance plan. Even if your employer pays for part or all of your health care costs, you may find that there are medical benefits offered by your employer that you qualify for but that your employer does not provide. For example, if you are offered a group health insurance plan and your employer does not offer a benefits package, then you may wish to take advantage of the group health insurance plan in order to reduce the cost of your health care premiums. Another advantage of having your own health insurance card is that you can monitor your health insurance costs in real time and compare them with what your employer is paying for coverage. Lastly, if you are self-employed and are covered under a business owner’s health insurance policy, it is often possible that your costs will be capped or limited based upon your personal health insurance rating, which can make it easier to budget your health care costs.

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