The United States of America has a developed insurance system, which is recognized as one of the best in the world. The US accounts for about a quarter of the global insurance market. Consider the types and features of the American insurance system.
The US insurance system: components
Let’s explain in simple words what insurance is. There are various unfavorable situations in life when you may need large expenses. However, they may or may not occur.
In order to protect yourself from them, an insurance contract was invented: you pay certain premiums, and then, upon the occurrence of an insured event (illness, damage to the car, disability), the company pays you an insurance amount to cover expenses. In Russia, this system is still in its infancy, in America it has long been established.
Part of an American’s salary goes to insurance – this is a mandatory budget item.
So, in the USA, the following types of insurance can be distinguished:
- real estate;
- car insurance.
Now about each type in more detail.
Unlike Russia, there is no free medicine in the United States, it has been completely replaced by a system of paid medical insurance. We will try to reveal all the main nuances.
So, the main document is medical insurance.
In accordance with the Affordable Care Act (or Obamacare) — the main law of the United States in the field of health insurance — the purchase of insurance is the responsibility of every US citizen.
If for some reason he does not have insurance, he may even be fined.
How medicine works in the USA, read here.
Who pays for the insurance
Your property and social status is important — it will depend on him who is obliged to pay the amount of insurance. The following options are possible:
- If you are poor, disabled or recognized as unemployed, the state itself pays for insurance (Mediacaid program);
- When your income is small in total, and at the same time the employer does not pay for insurance, this obligation is imposed on you, but part of the costs is covered by the state;
- The most common situation is that payment in full or in part is assigned to the employer if you work and have at least an average income;
- If you work in the USA and have a stable income, but the employer does not pay for insurance, these costs are again borne by you. This may be due to the specifics of the work;
- And finally, the last case: when you turn 65, the insurance is paid by the state under a special Medicare program.
Where and when the policy is issued
You can buy insurance on special Internet resources: a number of states use the federal website, some states have their own. It is there that you can get acquainted in detail with the basic conditions of insurance plans offered by various organizations and choose the right one for yourself.
In accordance with Obamacare, you can buy insurance from November 15 to February 15 annually. By the way, there was no such time frame before.
Types of medical insurance
Now let’s analyze the main types of health insurance. All of them can be divided into the following varieties:
- Health Maintenance Organization (HMO). As a rule, the most inexpensive insurance. You choose a general practitioner who will supervise you in the future (something like district doctors in Russia). It is this doctor who has the right to refer you to more specialized specialists. At the same time, you will not be able to get medical care everywhere, only in certain organizations. By the way, it is interesting to find out how much a doctor earns with such a system of work. The information is here.
- Exclusive Provider Organization (EPO). In general, it is similar to the previous type, but in this case there is no binding to the therapist: you visit doctors yourself. The limits of assistance are similar to those in the HMO.
- Preferred Provider Organization (PPO). This is a more expensive type of insurance, and if you have it on hand, you get the most favorable terms of health insurance. So, you can be served not only in “basic organizations”, but in almost any medical organizations (although this usually happens with an additional fee). No need to interact with a therapist: you contact the specialist you need at the medical institution of your choice on your own.
By purchasing one of these types of insurance, you undertake to transfer monthly insurance premiums stipulated by the contract. In the USA, such a contribution is called premium. Its size is usually 200-500 dollars per person.
On the one hand, it may seem that it is quite expensive, but sometimes the cost of operations reaches 20-30 thousand dollars, so it is more expedient to still pay these contributions.
Another important point about insurance: sometimes they do not cover the entire cost of treatment. In this regard, it is necessary to distinguish a number of terms, we will focus on them in more detail.
Co-pay is an additional payment for medical services. For example, you visited a doctor, paid a $30 Co-pay, and the insurance company covered the rest.
Deductible – the maximum amount of the amount you paid for medical services. The bottom line is as follows: when your medical expenses reach a certain amount, the insurance company will cover the costs in the future in a more significant amount already within the framework of Co-insurance (more on this below).
Co-insurance is the payment of medical care by you and the insurance company as a percentage provided by the insurance. For example, there may be the following ratio: 15 percent falls on you, and 85 percent falls on the insurance company. Recall that this system arises after your expenses have exceeded deductible.
At the same time, there is another important term within the framework of the US CHI — Out-of-pocket maximum. This is also a marginal amount, as well as Deductible, but after your medical expenses have reached this value, the insurance company pays for you the full cost of all subsequent services in the field of medicine.
As soon as the insurance year passes, everything is reset to zero, and you act again according to the same scheme from the very beginning.
In addition to medical care, the United States has a fairly developed social insurance system. Here the insurance cases are as follows: unemployment, disability, loss of breadwinner, old age (we will consider the issue of pensions separately). If health insurance is non-state, then contributions are paid to the budgets (to the federal and to the budget of the corresponding state where you live).
How the system is organized
First, let’s look at how the American social insurance system is organized in general. Every working citizen has an important document – Social security number (SSN), which certifies that you are subject to social insurance. It also serves as your accounting card.
The amount of benefits in the event of insured events will be calculated depending on how long you have worked, what was your income, etc. At the same time, social security should be distinguished from here, which is not tied to insurance, it is paid by the state to the poor, orphans and other needy (for example, free school lunches, housing, etc. are provided to certain categories).
Types of social insurance
On the loss of the breadwinner
It is paid if the deceased person was subject to insurance, worked, and with his death the family lost its main source of earnings, thereby needing additional financial support. This benefit is paid to the family members of the deceased (usually the spouse). If the deceased has dependents, the amount of social benefits increases.
Persons who have worked and become disabled (disabled) due to an illness that is not related to work can apply for it. General conditions: five years of work and a fixed amount of paid insurance premiums are required (as a rule, they are paid for the employee by the employer).
The contribution amount is 6.2 percent of the annual income, but there are numerous nuances associated with the participation of the state in adjusting this number. As a general rule, they are paid by employers. The payment of these contributions makes it possible to guarantee the insured persons in the event of unemployment the payment of appropriate benefits. The latter amount to an average of 250-300 dollars.
From occupational injuries (occupational diseases). If temporary disability benefits are paid when the illness is not related to work, then the situation is completely the opposite (payments in this case will also be an order of magnitude higher). Contributions are paid by the employer.
Every US citizen is insured against old age, and upon the occurrence of an insured event (as a general rule, this is reaching the age of 65) can claim a pension. Let’s analyze the main points concerning the US state pension program, as well as touch on the nuances of private pension insurance.
Accrual of pensions
The calculation of pensions is handled by the US Social Security Administration, it is this body that assigns the already mentioned Social Security number to citizens.
Working citizens pay the so-called pension tax, which is 7.65% of income if the total annual income does not exceed $ 65,000. 6.2% goes directly to the formation of a future pension, and 1.45% goes to medical care. Interestingly, if incomes are above $65,000, only 1.45% is charged.
Please note: this amount is paid by the employee himself. At the same time, the employer is obliged to pay exactly the same contribution, and thus, in fact, 15% of income falls into pension savings.
As a rule, the retirement age is 65 years, but for disabled people it may be less – 62 years. However, in the latter case, three years not worked will affect the amount of the pension, which will be slightly lower. If the insurance experience (that is, the period when pension contributions were paid) is less than 10 years, then the pension is not paid at all, and the citizen has the only way out – to apply for poverty benefits.
In addition, a US citizen can transfer part of the insurance pension contribution to the savings fund so that a funded pension is formed in the future. After 5-7 years, a person transferring contributions to a savings fund will be able to access these funds. Quite a large number of Americans receive a funded pension as an additional to the main one. At the same time, savings funds can be both public and private.
Personal retirement account
In addition to the basic state and funded pension, a citizen has the opportunity to open an individual retirement account (personal retirement account). Here he has the right to transfer sums of money that are not tied to taxes or insurance premiums. The annual threshold of funds that can be deposited is $2,000.
From the age of 60, you can withdraw this money, but after the pensioner reaches the age of 80, this account will be closed.
Surely many people are interested not so much in the pension system as in real pension payments to American citizens. The average pension in the United States is $1,300-$1,400, which is one of the highest rates worldwide. And this is despite the fact that in this case, people’s savings formed in the savings fund are not taken into account.
We recommend watching it. In America, it is customary to think about your retirement long before entering it. Often, in order to calculate savings, they turn to financial consultants.
Most Americans not only participate in social and health insurance, but also insure their lives. Unlike the previous types, in this case insurance is carried out on an individual basis, that is, there is no single system. If a person has a desire to insure his life so that in case of death his family members receive substantial insurance payments, he independently chooses a suitable company on the market and enters into a contract with it.
The terms of life insurance are determined by an agreement between the company and the citizen. At the same time, contributions can be made both during a certain period and at a time.
The system already familiar to Russian drivers is used here: liability insurance (CTP) and car damage insurance (CASCO). Let’s consider what conditions are necessary to obtain an insurance policy for a car, and which are essential:
- For people over 25 years of age, insurance will be much cheaper. This is due to the fact that in America, most road accidents are committed by young people (18-25 years old).
- In the event that you received your driver’s license in the same state where you intend to get a policy, you will receive a small discount.
- Your driving experience matters. If you come from another country, you can send a copy of the rights issued in your country to the office.
- For those who have a higher education, discounts are also provided (5-10%).
- If the car is on loan or leasing, the cost of the policy increases by 15-30%.
- Your driving history is taken into account: the organization makes inquiries as to whether you have had any fines, whether you have been in an accident, etc.
- The cost depends on the state, in this case an additional coefficient will be applied.
- If you have a garage, then insurance will be cheaper.
- Other conditions determined in each specific case and stipulated in the contract.
Deposits in American banks are also insured. To date, the amount of compensation in the event of an insured event (for example, a financial collapse of a bank) is $ 250,000 per deposit. These issues are handled by the Federal Deposit Insurance Agency (FDIC).
If desired, the owner of the dwelling (apartment or house) can insure it. This is usually caused by necessity: for example, in the state of Florida, insurance in connection with constant hurricanes has become widespread.
As for the amount of contributions, they can be calculated as a percentage of the value of the property (for example, 2-4% of the market price of the house).
However, everything is again negotiated individually. On average, fire insurance will cost $ 360, plumbing and electrical insurance – about $ 340.
As you can see, the United States of America has a developed insurance market that permeates essentially all areas: from real estate to life. According to numerous ratings, the United States occupies a leading position in social, pension, and medical provision, largely due to the insurance system, which is the fundamental basis of the whole of America.