Health Insurance Basics

What is health insurance and how does it work?

Health insurance markets work best when a large group of relatively healthy people buy insurance and pay their premiums year after year. Insurance markets do not work well when healthy people do not participate in great numbers and the primary purchasers of health insurance are those who will require expensive care. Indeed, insurers prefer to sell coverage to groups formed for reasons other than to purchase insurance, such as employer groups.

In addition to spreading financial risk, health insurance has another important function - guaranteeing access to health care services. Doctors and hospitals are more likely to care for people when they are assured they will be paid. Numerous studies have shown that people without health insurance receive far fewer health services (or delay needed health care) compared to the insured. Thus health insurance not only protects us from catastrophic expenses, it also secures access to important routine, preventive, and primary care services.

It is important to note that having insurance doesn't necessarily mean people have health security. In addition to the uninsured, an estimated 25 million Americans are under-insured; that is, they have insurance, but it is not adequate to protect them from catastrophic medical expenses or to secure access to needed care. The leading cause (approximately 50 percent) of personal bankruptcy in the U.S. is high medical expenses. The majority who cite this reason for their bankruptcy had health insurance. Thus, not only the presence of insurance, but the adequacy of insurance, is critical for health insurance to provide the protection consumers expect and need.

The most common way of getting health insurance is through an employer. Most employers offer their workers the opportunity to join a group health plan, and approximately 92 percent of private health insurance is provided through employer-sponsored group health plans. Depending on the number of employees, an employer might buy insurance in the small group market (usually between 2 and 50 employees) or the large group market. Employers tend to pay most of their employees' premiums, but often contribute less toward insurance for employees' family members. The employer contribution to employees' premiums is often made in lieu higher wages. Health insurance benefits provided by employers are not taxed as income to employees by either the federal government or states.

Approximately 14 million Americans (or roughly 6 percent of the non-elderly) buy their own insurance in the individual insurance market. They must pay the entire premium. Plans purchased in the individual market may cover an individual, a couple, or a family.  Do you need to provide your own insurance?

When considering your needs for insurance products for your health or life please contact Bennett Insurance Group at 623-979-4140

Presented By:
Jim Bennett
Bennett Insurance Group, Inc.
623-979-4140
http://jimbennettinsurance.com
jim@jimbennettinsurance.com