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Health Insurance Basics

One of the most important considerations when selecting a healthcare plan is to be sure that the plan's network of physicians will be able to meet your family's particular healthcare needs.  In today's world of managed care, consumers are offered access to healthcare through a network of qualified physicians, specialists and hospitals.  Affordable premiums and limited out-of-pocket costs are offered to consumers in exchange for managed cares' ability to control and direct a patient's treatment and expenses.  Working with a network of healthcare providers means lower payouts, thus lower premiums for consumers, as network service providers are able to spread fixed costs over more patient referrals within their network system. 

As a healthcare consumer in search of the least expensive plan, HMOs (Health Maintenance Organization) offer their patients the lowest out of pocket costs with the trade off of more restrictions, for instance not being allowed to see physicians outside of the defined network, as well as having to obtain pre-authorization prior to seeking certain treatments.  For those wishing to have more control and flexibility in their plan, PPOs (Preferred or Participating Provider Organization) may be a better option as they tend to offer more choices when selecting amongst healthcare service providers outside of a standard network.  The trade off with PPOs is greater choice in exchange for higher patient costs when electing to go outside of the pre-selected group of providers.

Consumer healthcare terminology is typically defined by the following terms: premiums, deductibles and co-payments.  Premiums are simply the monthly (or quarterly) cost of keeping your selected health insurance policy in effect.  Failure to make this payment will of course result in the termination of your health coverage.  A deductible is the amount you will be required to contribute towards any annual medical services you receive and once you have reached this amount, your insurance will kick in and begin payment.  Insurance companies employ the use of the deductible to reduce and cap their risk, in conjunction with the so-called utilization review, conducted internally to oversee and verify that the healthcare services of their group medical providers are being applied appropriately.  An inverse relationship exists between premiums and deductibles in that the more you pay of one, the less you will pay of the other.  After reaching your deductible you may then have to continue making what is referred to as a co-payment which is a fixed, normally minimal amount, you will owe each time you visit the doctor or pick up a prescription.  It is extremely important to consider all of the aforementioned costs and their inter-relationship when selecting amongst various plans. 

The best way to save on health insurance is to shop carefully for the best policy for your particular needs; that is the policy which provides the amount of coverage you truly need at a price you can afford to pay.  Other ways to conserve on healthcare expenses include maintaining a healthy lifestyle, eating right, exercising and avoiding tobacco and limiting alcohol.  Also avoid taking costly prescription medications whenever possible, particularly if lifestyle changes and diet modification would achieve similar health improving results.  


Nancy Osborne, ERATE.com Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.

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