Health insurance is a type of personal financial protection that covers some or all of a person’s medical expenses. In exchange for a monthly premium, the health insurance company agrees to pay a portion or all of the policyholder’s medical costs when they become ill or injured. It also usually pays for some preventative care services. The health insurance industry is regulated by both state and federal laws.
Deductibles and co-payments are common terms in health insurance. A deductible is the amount a person has to pay each year before the health insurance starts to pay for care. Some plans have a fixed deductible (such as a $50 co-payment for a doctor’s visit or prescription) while others use a tiered network where different providers charge different amounts for the same service. The more expensive the service, the higher the tier.
Pre-hospitalization and post-hospitalization expenses are another two types of medical expenses covered by health insurance. Pre-hospitalization expenses include things like ambulance charges, medicines and medical tests. Post-hospitalization expenses cover medical follow-ups, nurse care and medicines after a person is discharged from the hospital. Many people are unable to afford comprehensive health coverage on their own, especially if they have pre-existing conditions or are older than 65. This is where public health insurance programs like Medicare and Medicaid come in. Both offer subsidized coverage for the elderly, disabled and low-income families.
Choosing the right kind of health insurance can be difficult. Managed care plans such as HMOs and point-of-service plans require policyholders to choose a primary care physician who oversees their care, makes referrals to specialists and often sets the rate at which the plan will pay for certain services. This means that patients who go to an out-of-network provider must pay a higher cost, or even be denied coverage.
People may also need to find new health insurance when they change jobs or lose their employer’s group plan. Individuals can buy private health insurance, but this is generally more expensive than having a group plan through an employer. If they have a group plan through their workplace, COBRA allows them to continue to keep that coverage for a limited period of time. However, most individuals who use COBRA will need to find individual coverage or qualify for a public program, such as Medicaid, once their COBRA period ends. If they do not, they will have a gap in coverage which can be expensive, especially if they need to see a specialist or need medication for a serious condition.