The most basic definition of healthcare insurance is listed as the following: insurance plans that cover the areas of risk involved in situations that incur medical expenses. These areas of coverage include several areas of payment of benefits such as losses from accidents, medical expenses like surgeries or expensive treatments, disabilities, accidental death and dismemberment.
A most basic healthcare insurance plan, or policy as it is more commonly known, is a contract between an insurance provider and an individual. Such contracts are usually renewable annually, although some renew monthly, each policy varying according to the needs of the individual. Healthcare insurance is sometimes even mandatory in some countries for all citizens to have. To completely understand the inner workings of healthcare insurance policies, a more in-depth explanation is required.
Obligations of the Individual
Since a healthcare insurance policy is indeed a dual partnership, an agreement between the provider and the individual, certain tenets are required on the part of the individual. These include several “need-to-know” insurance terms like premium, deductible, copayment, coinsurance, exclusions and coverage limits.
Each of these terms usually comes as standard with any healthcare insurance policy so it is important to learn and understand their significance. A premium is the amount that the policyholder, which in most cases is the employer of the individual purchasing the healthcare policy, pays to the healthcare provider in order to purchase the health coverage. This applies to the purchase of health coverage that includes visits to the dentist, optometrist, general practitioner and more.
However, this does not necessarily mean that all these visits will indeed be covered by each and every healthcare insurance plan, as each policy varies by provider and by the individual. A deductible is of a similar idea as it is the amount of money that the individual must pay, out-of-pocket, before the health provider begins paying its share. To think of it in terms of a relationship, a premium is what the employer of the individual pays, whereas, to equal that payment, the individual pays a deductible, thus making a sort of equal partnership between an employer and the individual, all answering to the healthcare provider.
Here is where healthcare insurance policies get complicated. Every healthcare policy differs, especially in the amounts required for a deductible and also on another term, co-payments. Co-payments by simple definition are the amount the individual must pay out-of-pocket for certain visits or services. For example, say that a doctor’s visit came with a co-payment of thirty dollars.
The individual must pay for that co-payment out of their own pocket, which is added to the amount paid as a deductible, and all amounts must be paid before the healthcare insurance provider starts paying. Co-payments also include trips to the pharmacy for prescriptions, trips to the emergency room, which sometimes can add up to two hundred and fifty dollars, and other various services. The catch is that all of these visits and services must be paid out-of-pocket by the individual and that can easily become very expensive, very fast. That mandates the need for a deductible that is reasonable, and that kicks in at a relatively low amount so that the individual does not become buried beneath costly medical expenses.
After Meeting the Deductible
Healthcare insurance does not become simplified once an individual meets their set deductible rate, in fact, it becomes even more complicated. After meeting their deductible rate, an individual still has to account for other costs. The healthcare provider might take over paying for benefits, but will only do so conditionally. This is where co-insurance comes into play. Co-insurance will pay a certain share of the costs for the healthcare service based on a specific rate. It is explained as the percentage that the individual pays to cover the costs that the insurance provider does not.
For example, an individual who requires annual allergy medications, will surely meet their set deductible. Then, the insurance provider steps in and begins to pay for, say, eighty percent of the cost of the allergy medicine. The individual, despite having met their deductible, must still cover the remaining twenty percent cost of the medicine. That twenty percent coverage of the cost is their co-insurance.
Then, there is the complication of exclusions. As most healthcare insurance policies are varied and unique, some will cover certain visits and expenses and others will not. Therefore, it is important to know specifically what exclusions are applied under a selected healthcare policy, in order to plan accordingly for any unforeseen medical emergencies. Most healthcare insurance providers make this easy on the individual, providing a statement known as an “Explanation of Benefits”.
This is a document that clearly lays out what will be covered in terms of medical services and expenses and expressly states what areas are not covered. The document will also usually detail what responsibility falls under the obligation of the individual or patient and what responsibilities the provider will undertake. Reading such a document critically and thoroughly is thus very important to obtaining the best healthcare insurance needed by each individual's specific situation.
Limiting Factors to Consider when Searching for Healthcare Insurance
Of course, exclusions are not the only limiting factors to be taken into consideration when researching a potential healthcare insurance policy. It is also important to consider factors like age, marital status, status of dependency, income level, disabilities, geographic location and more, as all these factors contribute to the type and cost of an individual's healthcare insurance plan in terms of premiums.
Healthcare insurance plans are divided into five main categories: Bronze; Silver; Gold; Platinum and Catastrophic. The category from which a potential plan can be chosen is determined by the individual, the healthcare provider, and in most cases the employer, as it determines how both parties will split the costs of care. Each category has its own set of attributes, from definitions of deductibles, premiums and exclusions to the detailing of out-of-pocket costs once outside the area of influence of the healthcare provider associated with each specific plan. All in all, specific individual research regarding all aspects or exclusions that might affect a healthcare insurance plan must be carefully examined in order to purchase the best plan for each individual.