What Is Health Insurance?

By Cathy Wilson Posted in Health Insurance News

How Health Insurance Works

Health insurance covers a portion or all of your medical expenses from doctor’s visits to hospitalization. The amount of coverage you receive depends on your policy. Some cover 100 percent while others only cover a small percentage.

Many people receive healthcare insurance through their employer. They receive a group rate, which helps cut the costs. Despite this, health insurance is still expensive and rates rise rapidly throughout the country making it hard for everyone to afford decent health insurance.

If your health insurance is through your employer, the cost is deducted from your paycheck weekly, bi-weekly or monthly. If you must go private, you generally pay the fee monthly. If you do not use the health insurance, you still pay the premium.

Key Types Of Health Insurance

There are two key types of health insurance:

1.     Indemnity

2.     Managed Care

Indemnity insurance is also called “Fee for Service” health insurance. With this insurance, you have a set deductible, often $500. Once you’ve paid for $500 worth of medical care out of your own pocket, the company begins paying a portion, often 80 percent, and then you cover the remaining balance. Indemnity insurance is helpful if you have costly medical problems, especially if the plan comes with a maximum out-of-pocket limit. Once you’ve paid the maximum, the company pays everything else in full. Remember that indemnity insurance plans start fresh once a year. You’ll become responsible to meet the deductible as soon as a new policy year begins.

Managed Care health plans are more common. There are three forms of Managed Care plans: HMO, PPO and POS.

With an HMO, you choose one doctor from their list of providers. Each time you visit the doctor, you pay a copay and the insurance company pays the rest. They come up with maximum fees that the doctor is allowed to charge for each service. If you need to see a specialist, you must receive a referral from your doctor. If you see a doctor outside of their network, they will not provide any coverage.

A PPO is similar to an HMO, but often has a deductible you must reach before coverage begins. You choose your primary doctor from their list. If you need a specialist, you can choose those not on their list, but doing so increases the amount you will pay as your share.

POS (Point of Service) plans allow you to see any doctor you choose for primary health care and specialty care. If you choose a doctor on their list of providers, they’ll pay more towards your bills. If you choose someone not on their list, you’ll pay more.

Related posts:

  1. What Is A Managed Care Health Insurance Plan?
  2. What Is Indemnity Health Insurance?
  3. What Does A Fee For Service Health Insurance Plan Entail?
  4. What Is A Network Based Health Insurance Plan?
  5. What Is A Point Of Service Health Insurance Plan?

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