What Does Health Insurance Do?

By Robert Fredricks Posted in Health Insurance News


The 2009 Merriam-Webster dictionary defines insurance as “a means of guaranteeing protection or safety.” Simply put, health insurance is a way to guarantee the availability of healthcare and the payment of medical bills. While the different types of health insurance can be complicated, the basic purpose of health insurance is to provide the insured with access to medical treatment and a pay schedule based on coverage.

Health Insurance Plan Coverage

Much like car insurance insures your car for accidents, repairs and damage; health insurance insures your health. For example, let’s say you are insured under an HMO plan from your employer and you break your arm and have to go to the emergency room. According to your HMO plan you would have to pay a copay up front for the emergency room visit but everything else would be covered under the insurance plan. You may wonder how the insurance companies survive financially if they’re constantly paying out large sums of money to cover health expenses.

While one patient may rack up a million or more in health care bills another insured with the same company may only make routine visits to their primary care physician. So while the patient with the large bills gets more out of the insurance then they put in, the healthy person does the opposite. They may pay $300 a month in insurance coverage but only accrue a couple hundred in medical bills.

Different Health Insurance Policies Available

The different policies available depend on where you get your health insurance. Government programs like Medicare and Medicaid offer a few different plans but the public has no control over which plans they qualify for or how much they receive. The government determines all this. Private insurance plans offer several types: HMO, PPO, and EPO to name a few. However, you may be at the mercy of the plans offered through an employer.  The premium paid monthly, or bi-monthly, to the insurance companies will be different for each plan and will largely depend on how much the employer covers of the overhead cost.

Related posts:

  1. How Does The Co-Insurance Clause In My Health Insurance Plan Work?
  2. Why Is Health Insurance So Important?
  3. How Does Comprehensive Health Insurance Policy Coverage Work?
  4. What Does A Fee For Service Health Insurance Plan Entail?
  5. How Does One Survive Without Health Insurance?

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