Medical insurance, or health insurance, is an agreement between you and an insurer to help pay for some or all of your medical expenses. It is typically based on a monthly fee (premium), a deductible, and coinsurance. Depending on your plan, it may cover a range of services and treatments, from routine doctor visits to prescription drugs and surgeries. It also generally covers preventive care, such as annual checkups and certain vaccinations.
In the United States, the Affordable Care Act requires most individuals to have medical insurance or face a financial penalty. Individuals can obtain private health insurance by purchasing it on the open market or through the exchanges set up under the act. People with preexisting conditions and those with lower incomes can qualify for subsidized coverage through Medicare or the Children’s Health Insurance Program.
A health insurance policy helps pay for healthcare costs when you meet certain criteria, such as satisfying a deductible and meeting an annual out of pocket maximum. In general, the more you pay for your own health care, the less the insurance company pays. This is why it is important to understand your deductible, coinsurance and copays before going to the doctor or pharmacy.
Most health insurance plans have networks of approved doctors and hospitals. In general, your costs will be lower if you use providers in the network. This is because the plan has negotiated lower rates with them.
Some plans require that you choose a primary care physician who will oversee your treatment and provide referrals to specialists. Others, such as preferred provider organizations (PPOs), do not require a PCP and allow you to go directly to a specialist. Many plans also limit the coverage they provide for out-of-network care.
In addition to reducing cost, medical insurance offers other benefits that can improve your quality of life. For example, it can give you peace of mind knowing that most preventive visits, such as annual exams and immunizations, are free of charge. It can also help you manage chronic diseases, such as diabetes and heart disease, by providing regular screenings that can detect problems at an early stage.
Despite the promise of universal coverage, problems remain with our current system of healthcare. Patients report denials of coverage, long wait times for procedures and the difficulty of getting needed medications. Doctors and nurses say that the administrative burdens imposed by insurance companies interfere with their ability to practice medicine. And hospitals are struggling to survive amid a growing backlog of unpaid claims. The vast majority of hospital chief executives say that the problem is getting worse, and nearly half are unsure whether they can survive another year.