Facts about the advantages and disadvantages of health insurance

Health insurance is the primary vehicle that most consumers use to pay for medical and hospital bills. There is public health insurance such as Medicare and Medicaid, and there is private health insurance. Within the category of private health insurance, there are significant differences between a health managed organization (HMO) and a preferred provider organization (PPO) plan. Depending on the type of private health insurance you select, there will be certain benefits and limitations. While most financial planners will encourage you to carry a form of private coverage, it can come with some disadvantages that should be considered when you purchase a policy. Here is a list of the pros and cons of private health insurance that you should know about in order to make the choice that is right for you.

Advantages of private health insurance

Of course, the most obvious advantage is that health insurance can provide coverage for some of your healthcare expenses. Doctor's visits, trips to the emergency room and specialist treatments may be paid for (either in part or in whole) by this type of insurance. With health insurance, large hospital bills associated with surgery or other major treatments may also be covered depending on your specific policy.

And a PPO health insurance plan may also allow you to choose your own doctor, although you may pay more if he or she is not included in the network maintained by your health insurance carrier.

Private coverage also usually comes with more choices than those offered by public plans such as Medicare. This could allow you to choose the options that you are most likely to need and omit those that you don't. The experiences that come with private health insurance might include shorter wait times, greater individualized attention and more sophisticated facilities. Public facilities can be overcrowded at times and may provide a lower level of care in many cases.

Disadvantages of private health insurance

As you might expect, the greatest disadvantage of private health insurance can be the cost. This is especially true if you are in poor health and do not have access to group coverage of any kind. Many individual policies can cost several hundred dollars a month, and family coverage can be even higher. And even the more comprehensive policies come with deductibles and copays that insureds must meet before their coverage kicks in.

Most health insurance policies don't offer coverage for all types of diseases and conditions. Those who need care that falls into one of the gaps that are written into these policies are on their own when it comes to paying for certain medical services. Furthermore, the cost of healthcare has risen much faster than the general rate of inflation, and this trend shows no sign of slowing. 

These are just some of the advantages and disadvantages of private health insurance in the marketplace today. For more information on types of health insurance, contact your employer benefit representative or your financial advisor.

 

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