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Health Insurance is an industry that is continually changing in both the cost and the coverage. A recent survey found that big employers expect their health care cost to rise 8.9% in 2011. With higher costs, most employers are no longer providing health insurance entirely and have begun to shift some of the burden to the employee. The reason for health insurance is simple; it is to transfer risk. The need for health insurance is universal, no matter how healthy you are. The leading cause of bankruptcy in America is due to medical bills. It is not the prescriptions and doctor visits that we are worried about, but rather the emergency surgery after a car accident that will get you.
There are primarily four types of health insurance:
- Indemnity-The benefit of this plan is more flexibility in choosing your doctor. Usually there is a deductible and once the deductible is met there is a co-pay
- Health Maintenance Organization (HMO)-This is where an employer negotiates health costs at a reduced rate as long as the employee uses the specific doctor. This usually requires a patient co-pay.
- Preferred Provider Organization (PPO)-Similar to a HMO but an employee can choose among many doctors in a network instead of just one. You can also go to doctors out of network, but you receive deep discounts only through the preferred providers.
- Health Savings Account (HSA)-This is usually a high deductible but low premium service. Probably the best for “healthy” families as it receives favored tax treatment.
Health Insurance is a necessity in having a healthy financial plan. My family uses a HSA since we are fairly healthy and we love it. I will be reviewing more in-depth the pros of HSA’s soon. Unfortunately health insurance gets neglected, especially among the young, when going through a financial crisis. For those who do not have health insurance, I would make this a high priority before I tried to get out of debt to ensure that you would not bankrupt your family in case of prolonged illness or injury.