Frequently Asked Questions on Health Insurance

Health insurance is and always has been a hot topic for politicians and individuals alike. And the healthcare reform legislation passed in 2010 led to even more questions. If you're confused about health insurance, you're not alone. The good news is, by understanding a few basic principles and FAQs, you can gain a great understanding of how health insurance works in the United States.

Why Do I Need Health Insurance?

• The cost of health care has risen steadily over the last few decades. If you don't have health insurance and you get injured or seriously ill, this can be a huge financial burden to you and your family.

What Are the Different Types of Health Insurance Plans?

• In a preferred provider organization, or PPO plan, insurance companies partner with healthcare organizations to provide discounted rates to patients. In a PPO, you can usually go to a different doctor, or "out of network," for service, for an additional charge. In a health maintenance organization, or HMO plan, the insurance company also partners with healthcare organizations, but you have to choose a primary care physician. If you want to get treated out of network, the HMO plan will usually not cover this. Point of service, or POS plans, are a combination of PPO and HMO plans. In a POS plan, you also need to choose a primary care physician, but the plan will pay for part of your medical costs if your primary care physician refers you to another doctor who is out of network.

How Will Health Care Reform Passed in 2010 Change the Current State of Healthcare?

• According to the White House, health insurance reform prevents insurance companies from denying coverage because you have a pre-existing condition. It prevents insurance companies from canceling coverage when you get sick. It also bans annual and lifetime limits on coverage.

How Will We Pay for Health Care Reform?

• While there's no clear-cut plan on how to pay for the estimate $1 trillion cost of healthcare reform, the White House states that "cutting waste, fraud, and abuse within existing government health programs; ending big subsidies to insurance companies; and increasing efficiency with such steps as coordinating care and streamlining paperwork" will help offset many of the costs."

What is COBRA Health Insurance?

• The Consolidated Omnibus Budget Reconciliation Act (COBRA) was enacted in 1986. COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children with temporary health insurance at group rates for a specified period of time. If you're let go from your job due to corporate downsizing, for example, you can file for COBRA health insurance so you or your family doesn't go uninsured.