The Basics of Health Insurance
Like any other forms of insurance, health insurance is also a form of collectivism and through which selected people voluntarily pool and accumulate their possible risk like having medical needs and expenses. Some health insurance are provided by the government while some are from private companies; still others are organized by non-profit companies, while others are managed by companies with the profit purpose.
Health insurance may also be furnished on a group basis, like when a company provides it as a part of their benefit package, or it can also be done by individuals. In whatever case may be, premiums or taxes are collected for the protection of unexpected expenses pertaining most especially to health care.
The person insured may also take several obligations in the form of the following:
Premium-this is the amount that the person, who is called the policy holder, or his company, which can be referred to as the sponsor, has to pay to the plan on a monthly basis.
Deductible-this is the amount that the person insured must pay out of his pocket before the insurer of health pays the share that belongs to him. For instance, a holder of policy might need to pay $400 which can be deductible each year, before the health insurer covers any of the health care provisions. It can even take several visits to the doctor or refills of prescription the policy holder or the insured person will be able to reach the deductible and then finally the insurance company will then be starting to pay for that particular care.
Co-payment-this is the amount the policy holder should pay out of his pocket again before the insurer starts paying for a certain visit or any service. An illustration of this will be- the policy holder should pay $50 co-payment for a visit the doctor or in obtaining a prescription. Therefore, a co-payment must be done each particular time that a certain service will be obtained.
Co-insurance-aside from paying a certain fixed amount in advance or up front, like a co-payment, the co-insurance, on the other hand, is a percentage of the certain total cost that the policy holder or the person insured should also pay. This happens when a person has to pay 30%, for instance, of the total cost of the surgery he has undergone which is over and above the certain co-payment, while on the other hand, the insurance company will be paying the remaining 70%. Depending on the actual costs of the particular service obtained, the insured person has the tendency to owe a very little, or a definitely great deal instead, if there is an upper limitation on co-insurance.
Exclusions-the policy holder has to keep in mind that not all services are definitely covered by the insurance company. The person insured is definitely expected to shoulder the full cost of any non-covered services.
Coverage limits -there are health insurance companies that pay only for a certain health care only to a particular dollar amount only. The policy holder can be sometimes expected to pay any excess charges that had reached the plan-s maximum payment for a particular service. Furthermore, some companies’ scheme actually has annual or even lifetime coverage maximums. So that it is expected that the plan will not pay anymore after reaching the maximum benefit; the person insured, therefore, will pay all the remaining costs.
Out-of-pocket maximums-this is quite similar to coverage limits, but in this case, the policy holder’s obligation of payment ends when they reach the certain out-of-pocket maximum, and then the insurance company will pay all remaining covered costs. This can also be limited to a particular benefit category, like drug prescriptions, or it can also be applied to all coverage period for a certain benefit year.
Capitation-this is an amount paid by a health insurer to a provider of health care, for which the latter agrees to treat all of the insurer’s members.
Prior Authorization-this is a certification or as the term implies, authorization, that a health insurer gives prior to or before any medical service to occur. Obtaining this will mean that the insurance provider is obliged to pay for any of the services, assuming that it will match what was already authorized. Although, some routine and minor services don’t need any authorization anymore.
Explanation of Benefits-this is a document that must be sent by the insurance company to a patient with the detailed explanation on what was covered in a certain medical service, and on how the company arrived at the certain payment amount and whatever the patient’s responsibility or obligation to pay.
If at this point, you are on the verge of getting one, make your comparisons. Ask for different health insurance quotes before jumping on choosing one. This is one decision that will need your extra analysis power.
