Health Insurance

Health Insurance  Coverage Overview

The term group health insurance is generally used to describe a form insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through government-sponsored social insurance programs, purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the groups or individuals covered pay premiums or taxes in order to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government rather than the beneficiaries.

Group Health Insurance works by estimating the overall risk of healthcare expenses and developing a routine finance structure (such as a monthly premium, or annual tax) that will ensure that money is available to pay for the healthcare benefits specified in the insurance agreement. The healthcare benefit is administered by a central organization, which is most often either a government agency, or a private or not-for-profit entity operating a health plan.

Market-based health care systems such as that in the United States rely heavily on private and not-for-profit health insurance. In the U.S., according to the Census Bureau, some 60% of the population receives health insurance coverage through employer-sponsored plans. Government programs cover another 27% of the population, and about 9% of the population purchases insurance directly (there is some overlap in these figures).

Health insurance companies offer HMO’s, PPO’s, and custom health plans designed for specific group needs depending on state and company requirements.  Most health insurance companies offer a wide variety of deductibles and co-payments that allow the consumer to tailor health insurance benefits with premium cost.

Heath Insurance can be complicated and should not be taken lightly when making decisions.  Always consult a qualified, licensed professional when looking to purchase insurance or financial products and services. Some companies that write medical coverage are (not all companies are available everywhere, be sure to check with your local broker or agent for availability).

A Health insurance policy is a contract between a company and an individual. The contract can be renewable annually or monthly. The contract can be renewable annually or monthly. The type and amount of health care costs that will be covered by the plan are specified in advance, in the member contract or Evidence of Coverage booklet. The individual policy-holder’s payment obligations may take several forms:

Premium: The amount the policy-holder pays to the health plan each month to purchase coverage.

Deductible: The amount that the policy-holder must pay out-of-pocket before the plan pays its share. For example, a policy-holder might have to pay a $500 deductible per year, before any of their health care is covered by the health plan. It may take several doctor’s visits or prescription refills before the policy-holder reaches the deductible and the health plan starts to pay for care.

Copayment: The amount that the policy-holder must pay out of pocket before the health plan pays for a particular visit or service. For example, a policy-holder might pay a $45 copayment for a doctor’s visit, or to obtain a prescription. A copayment must be paid each time a particular service is obtained.

Coinsurance: Instead of paying a fixed amount up front (a copayment), the policy-holder must pay a percentage of the total cost. For example, the member might have to pay 20% of the cost of a surgery, while the health plan pays the other 80%.

Exclusions: Not all services are covered. The policy-holder is generally expected to pay the full cost of non-covered services out of their own pocket.

Coverage limits: Some plans only pay for care up to a certain dollar amount. The policy-holder may be expected to pay any charges in excess of the health plan’s maximum payment for a specific service. In addition, some plans have annual or lifetime coverage maximums. In these cases, the plan will stop payment when they reach the benefit maximum, and the policy-holder must pay all remaining costs.

Out-of-pocket maximums: Similar to coverage limits, except that in this case, the member’s payment obligation ends when they reach the out-of-pocket maximum, and the plan pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.

Prescription drug plans are a form of insurance offered through many employer benefit plans in the U.S., where the patient pays a copayment and the prescription drug insurance pays the rest.

Some care providers will agree to bill the company if patients are willing to sign an agreement that they will be responsible for the amount that the company doesn’t pay, as the insurance company pays according to “reasonable” or “customary” charges, which may be less than the provider’s usual fee.

Companies also often have a network of providers who agree to accept the reasonable and customary fee and waive the remainder. It will generally cost the patient less to use an in-network provider.

Some companies are now offering Health Incentive accounts (HIA), to reward users for living and making healthy choices, like stop smoking and/or losing weight, may get you funds added into your HIA, which may lower your out of pocket costs. The HIA accounts also carry over from year to year but once you leave the program you lose those benefits in the HIA.

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