What is Health Insurance?
Health insurnace is a type of insurance that covers the cost of policyholder’s medical expenses including surgical, dental, hospitalization expenses, etc. Basically, health insurance helps you pay a portion of medical expenses. Just like car insurance, you pay a monthly premium for your policy. Health insurance also covers you in case of an accident.
Just like other insurance plans, the premium cost for health insurance varies according to the type of coverage you choose.
When buying a health insurance policy, keep the following consideration in your mind.
Components of a Health Insurance Policy:
Premium is the amount/ fee that you pay for your coverage. This premium is calculated by the insurance providers based on different factors like gender, age, and medical history. If you choose to pay less premium, you will be paying high medical expenses out of your pocket and vice versa. You need to pay these premiums on the due date. If you don’t pay the full premium on the due date, your health insurnace policy may get suspended or canceled.
Health insurance deductible is the amount that you pay out of your pocket before your insurance policy pays for medical expenses. A deductible can be $500 or sometimes it’s much higher. This amount varies according to your selected coverage. So, when buying health insurance, ask your insurance provider for these deductibles.
Copayment, also know as copay, is the amount of money that you pay each time you visit a health care center. You pay this amount at the time when you receive a health service. Copay varies according to the type of health service you received. This is the fixed amount you need to pay and the rest of the bill is covered by your insurance policy. For example, if your copay is $50 and your health service total fee is $500, you will pay $50 and the rest is paid by your insurance policy.
In addition to deductibles and copayments, you also pay coinsurance. Coinsurance is the percentage that you pay for the health service you received. Coinsurance is different from copay because copay is a fixed amount while coinsurance is the percentage of your share in medical service’s expenses. For example, the total cost of your health service is $2000 and the copay is $50. The insurance company pays 80% of the remaining cost ($1950) or $1560. The total amount you would pay out of your pocket is copay($50) plus 20% ($390) which would be $440.
Sometimes health insurance policies don’t cover all of the medical expenses such as tummy tucks or facelifts etc. Before buying a health insurance policy, you should ask for all these exclusions from your insurance provider.
- Coverage Limits:
There is a maximum coverage limit associated with your health insurance policy. These limits can be monthly or annual.
How Does Health Insurance Work?
Health insurance policy protects you from paying the full amount of your medical services and expenses like pre-hospitalization, stay and post-hospitalization.
Health insurance policy comes with different coverage options, you can choose the plan that fits best for your needs. Different insurance plans impose a condition that you receive health services from a certain network for the highest level of coverage. If you choose health service outside of this network, you will be paying a high percentage of the total cost.
Sometimes, certain health services need preauthorization otherwise your coverage can be denied. All these conditions and limits are mentioned in the contract between you and your insurance provider.
Importance of Health Insurance
Having health insurance is an important part of your financial life because medical services are always very expensive. Health insurance is not important for yourself, it also important for your family. Because it becomes a tough situation when the sole earner is in a hospital bed.
Health insurance is so important that in some countries, like the United States, health insurance is included in the employer’s package.
Benefits of Health Insurance
- Financial Protection:
Having a health insurance policy protects you from financial attacks like medical bills that are very expensive. You only pay premiums, deductibles, and copay, the rest of the medical bill is paid by your insurance policy.
- Cashless Claim Benefit:
Many insurance providers provide cashless claim benefit options. In this option, you are required to get admitted to the insurer’s network of hospitals. All of your expenses will be settled by your insurer.
- Easy To Find a Doctor:
If you’re a traveler and you’re out of your country where you’re in a medical emergency, your insurance provider can help you find a nearby doctor/hospital within the insurance provider’s network. Not only it helps to find a doctor/hospital but it also saves a lot when it comes to medical bills.
- Peace of Mind:
Health insurance policy gives you peace of mind that you’re always covered when you’re at a very vulnerable point in your life. Your insurance provider will be there to make sure your treatment is started immediately.
Having good health is the most precious asset, and we all protect it at all costs. Health insurance policy contributes a lot when it comes to paying expensive medical bills.
If you have any confusion about the health insurance policy, let us know in the comments section below.
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