Health Insurance Policies
Health insurance is a type of insurance that covers the cost of medical and surgical expenses. The type of medical coverage will depend on how the coverage will take place. The insured can either pay the bills and then be reimbursed or he can make regular payments directly to the provider.
Just to familiarize yourself with various health insurance terminology, here are some definitions:
- The provider means the hospital, doctor, clinic or healthcare practitioner.
- The insured is the person with the health insurance coverage.
In countries where there is no universal healthcare coverage such as the United States, it is included in employer benefit packages and seen as an employment perk.
Is Health Insurance a Human Right?
In some countries, healthcare coverage is provided by the state and viewed as a human right. It is classed as a public service along with the police, firefighters, street lighting workers, and public education servants.
In the US, health insurance is provided only to the elderly, disabled, and veterans. For others, it is an individual’s responsibility to be insured. However, recently laws were introduced to make it mandatory for everyone to obtain a health policy of some kind.
Every person will need some kind of medical attention or treatment at some point in their life. At such times, the patient should be able to concentrate on getting better, rather than worrying about how they will pay the bills.
Two Broad Types of Health Coverage
Regardless of the insurance company you chose, there are mainly two types of health insurance:
- Private health insurance
- Public health insurance
The American healthcare system relies heavily on public insurance. Public or government insurance is provided by the state. One characteristic of public insurance is that premiums need to be collected. One example would be Medicare, which is an insurance program for people above 65 years or people who are disabled.
Another example of public insurance would be Medicaid, which is funded jointly by the federal government and individual states. Other examples of insurance companies running such programs include TRICARE, the Veterans Health Administration and the Indian Health Service.
Managed Care Plans
Managed Care Plans are health insurance plans that are in mutual agreement with healthcare providers to provide medical care at lower costs. These providers stipulate rules on how much of the care plan they will pay for.
If a service provider offers you an insurance quote, make sure to clarify if such plans are available. Restrictive care plans cost less compared to flexible plans, which are more expensive.
What are Indemnity Plans?
Indemnity plans are when the insured gets to choose the doctor he/she wants and then either the doctor or the insured submits a claim for reimbursement to the health insurance company.
However, the insured will only be reimbursed according to what is mentioned in the Benefits Summary. Therefore, it is vital to carefully read the fine print, even when looking for cheaper health insurance. Most indemnity plans cover for the vast majority of procedures.
Although not all the medical and surgical services are paid for, indemnity plans usually pay for at least 80% of the customary cost. The insured is left liable for any excess charges accrued.
Here is an exemplary scenario of coinsurance and excess charges:
- You see a doctor for “high blood pressure” care
- It is deemed that the customary fee for this care is $200
- The insurance company pays for 80% of this amount which is $160
- The insured is expected to pay the remaining 20%
However, if the provider bills you $250 as the customary fee, you will have to pay the extra $50.
What Are Deductibles?
As you compare health insurance quotes from various companies, you will often hear about deductibles. Deductibles refer to the number of covered expenses the insured has to pay before reimbursement kicks in to cover the medical cost.
The deductible total may range up to $300 per person annually. As soon as the insured expenses reach a certain limit, the plan will cover the customary fees.
Health Maintenance Organizations (HMOs) and Preferred Provider Organization (PPOs)
HMO’s deliver care directly to the insured. The insured then goes directly to the healthcare professionals found at the Health Maintenance Organization. The insured does not pay for each service he or she receives.
On the contrary, a set premium is paid to the HMO, which in turn provides a range of medical services. The HMO will nearly always insist that the insured receive medical attention from professionals and facilities within its network of providers.
This is because they negotiate fees with select professionals in advance for each medical service. This helps keep the costs at a minimum and helps to provide cheap health insurance.
A PPO merges with healthcare providers and laboratories to negotiate preferential prices. The providers come to an agreement with the PPO and become part of its network. An insured can see any doctor wherever they like.