Health insurance coverage helps spread out the cost of expensive health care, helping people gain access to care that they otherwise couldn’t afford. You never know when you might get sick, injured or when you may need expensive medical care, so a monthly fee – “premium” – is assessed for insurance that helps pay your medical bills. Health insurance also covers preventive care like doctor visits, vaccinations and screenings before you ever get sick.
In Minnesota, there are generally three types of health insurance: fully insured plans, government-sponsored plans and self-funded plans.
- Fully insured: If you have a fully insured plan, either you (through an individual market plan) or your employer pay a premium each month to an insurance company. Your insurance company then pays your medical bills with that money. If your bills are more than you have paid in premiums, your bills still get paid. Typically, smaller companies offer fully insured plans to employees. About 26% of Minnesotans are fully insured.
- Government-sponsored: If you have government-sponsored coverage, you are enrolled in programs like Medicare (which serves people who are 65 and older or younger people with certain disabilities), Medicaid (which serves low-income families and individuals) and MinnesotaCare (also serving those who are low-income, but may require them to pay a monthly premium depending on income level). Through these programs, the federal or state government pays for the coverage each month and the health plan pays medical bills. About 36% of Minnesotans have government-sponsored insurance.
- Self-funded (or self-insured): If you have this type of insurance, your employer is paying your medical bills with its own money, thus the term “self-funded.” Companies and organizations that fund their own plans hire a health insurance company to do the administrative services for their employees. This includes sending out health insurance cards, contracting with doctors and hospitals and answering questions from employees. Larger companies that have significant financial resources – and can take on the financial risk of insuring employees themselves – typically offer self-funded plans. About 34% of Minnesotans have self-funded insurance.
Generally speaking, you and your health insurer share costs up to a certain point. What you pay depends on your deductible, copayment, coinsurance and out-of-pocket maximum. Each health plan will have different combinations of these costs. The deductible is the total amount you need to pay before your insurance plan starts paying your bills, the copay is a flat fee you pay for specific services, coinsurance is a percentage of costs that you cover for certain health care services and the out-of-pocket maximum refers to the most you will pay for covered services each year.
What do you get for the money you pay each month? Although your health insurer pays on average more than $800 for medical care every second, it does a lot more work behind the scenes, including:
- Reducing medical expenses by negotiating discounted rates with doctors.
hospitals and other providers to offer quality care at a lower price.
- Protecting us from financial ruin if we are badly injured or become very ill.
- Helping us stay well with preventive services and incentives like health-club discounts.
- Improving care by creating new models of payment that pay providers based on the quality of our health, not the quantity of service.
- Working with community organizations and stakeholders to make social and environmental