An Introduction to Health Insurance in the USA
Unlike many industrialized countries, the US does not have a universal health care system. As a result, medical costs in the United States are astronomical. For example, giving birth in a hospital will cost, on average, $30,000 USD. Of course, a vast majority of people could never pay for such an expense out-of-pocket. Instead, most people living in the US take out private medical insurance policies to help cover medical bills.
How Does Medical Coverage Work?
Much like other types of insurance, medical insurance will cover all or a portion of qualified medical events during your coverage period. You will pay an annual premium, usually divided into monthly payments. If you have been hired full-time by a US employer, chances are you will be offered some medical coverage as part of your compensation package. However, it’s likely you will still have to pay for a portion of the premium, which will be automatically deducted from your paycheck.
How Do I Use My Health Insurance Coverage?
How you will access medical care relies greatly on the type of insurance you have. In the US, there are several types of health insurance networks, but the most common are Health Maintenance Organizations and Preferred Provider Organizations.
Health Maintenance Organizations (HMOs)
An HMO provides its medical services through a closed network of doctors and facilities. In order for you to use your insurance coverage, you must use these in-network providers, or you will be stuck with the entire bill. First, you will need to identify a primary care physician (PCP), a doctor who will be your first point of contact anytime you need medical services. If you would like to see a specialist, you must go through your PCP first for a referral. You are not allowed to see a specialist without this referral. Therefore, HMOs are known to be the least flexible medical coverage plans. On the other hand, you will often find all the services you may need in one facility, you don’t need to file any claim forms, and you will often end up paying less for your policy.
Preferred Provider Organizations (PPO)
A PPO is also a network of doctors and facilities, but these plans give you much more flexibility. First, while you will always pay less for in-network medical care, you can still visit out-of-network doctors and facilities and expect to have some coverage. When you do visit an out-of-network doctor, though, you will often need to pay up-front and submit a claim form and wait for reimbursement. Additionally, you do not have to choose a primary care physician and generally don’t need a referral to visit a specialist. You can research the specialist you want to see and book an appointment directly. PPOs, therefore, give you a great degree of control over your medical care. However, these benefits come at a cost: most PPO insurance policies have higher premiums than HMO policies.
If your medical coverage is provided by your employer, make sure you talk to your Human Resources representative about the details of your plan, how to use it, and what’s covered to avoid any unexpected costs.