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What’s the Difference Between Disability Insurance and Health Insurance?

Health insurance and disability insurance are both used to help a patient pay for costs that are associated with medical complications, but they are not the same thing. A patient uses disability insurance in order to provide a source of income in the event that a medical event prevents them from being able to work. Health insurance, on the other hand, is used to pay for the costs of medical procedures themselves.

Health Insurance

Health insurance is used to pay for the costs of medical care. Typically speaking, health care coverage involves a premium, a co-pay, a deductible, and coverage. Co-pay is the portion of funds that you will need to pay when you visit the doctor. If you visit the hospital, costs below the deductible will not be covered by the insurance company, and you will be required to make these payments out of pocket. The coverage determines how much the health insurance company will pay for given procedures, and which procedures are covered.

The premium is the monthly or periodic payment that you make to the insurance company in exchange for coverage. Your premiums will be affected by your overall health, as well as demographic information.

When applying for health insurance, you will typically be asked to undergo medical screening, in which they will look through your health records in order to determine how high your risks are. They will use this information to determine if you are eligible for care, and what your premium will be if you are.

Disability Insurance

In exchange for periodic payments, usually made monthly, disability insurance will provide an individual with income when they are not able to work. This can be used to pay for sick-leave, short-term disability, and long-term disability.

Most people are less prepared for the possibility of disability than they should be. This is because most people think that it is unlikely they will end up in a situation where they are unable to work due to disability. But according to the Social Security Administration, workers at the age of twenty have a thirty percent chance of becoming disabled, at least temporarily, before they reach the age of retirement.

While this fact is certainly influenced by many factors such as your age, health, and the industry that you work in, it means that the risks are actually surprisingly high. It means that about a third of workers will become disabled during their lifetime. Workers should have a plan to prepare themselves for the financial situation that would result.

Mandated Health Insurance Benefits

A mandated health insurance benefit is a legal requirement applied to private health insurance contracts. Both federal and state governments apply these mandates to health insurance policies. A recent example of mandated health insurance benefits is the patient care and protection act, commonly known as Obamacare for short. This law contains many mandates, not all of them applying to health insurance policies. The requirement for all individuals to carry government approved health insurance by 2014 is one. The requirement that men and women pay the same premiums is another. The requirement to not deny coverage for pre-existing conditions is another.

For years, the US congress left regulation of health insurance companies to the states since most states did a thorough job of monitoring the health insurers. The states have increased their mandates on health insurance policies substantially in recent years. Depending on the state, these mandates cause increases in premiums of up to 25 percent. Whenever premium rates increase more than "inflation creep" allows for, more people decide their health insurance is no longer affordable. This leads to one of two outcomes. People become uninsured or apply for government health insurance programs such as medicaid. Neither is a desirable outcome.

There are currently 1000 health insurance policy mandates throughout the USA. That is an average of 20 mandates per state. (1000/50 = 20) These mandates can cover any issue from covered services such as acupuncture or massage therapy to who may provide the services, such as Physicians, nurse practitioners, dentists, optometrists. The number and type of mandates a state requires insurers to cover will affect the policy prices. E. G. in New York State a family of 4 will pay $12,000.00 annual health insurance premiums. In the neighboring state of Connecticut, the same family of four would pay $8,000.00. Why, New York has more mandates than Connecticut. Under current law, individual health insurance policies cannot be sold across state borders. This gives each state legislature a captive audience for their mandates. The only way health insurance policy holders can get health coverage for a better price or better services is to move to another state.