What is Health Insurance?
Health insurance pays or covers all types of medical or healthcare expenses incurred by the insured. The governments of countries usually provide healthcare insurance to its people while there is also private health coverage, provided by a private health insurance company.
Private health insurance is a kind of legal contract between the employee and the health insurance company. The policyholder had to make payments (premiums) to secure coverage of medical treatments, and the benefits received from it are particularly tax-free. Health insurance is important and necessary for you unless you’re very wealthy or very poor.
How Does Health Insurance Work?
Health insurance works by helping you pay high costs of medical bills. It pays for your hospitalization and prescription or other health care procedures. It helps you by securing your savings from some shattering bills after a crucial accident or medical emergency. Health insurance takes responsibility for the cost of yours and possibly your family’s medical care.
Let’s suppose you have a critical injury, and your total medical bills sum about $40,000. Now your health insurance can make a huge difference for you in the amount you’ll pay. Considering the right amount of your deductible and coinsurance, it may be possible that all you need to pay is $5,000, and the health insurance company will pay the rest of the amount for you.
Policy holders are obligated to receive medical care from a network nominated by the healthcare providers to receive a smart amount of coverage. If a policy holder seeks medical care outside the network provided, the insurance company may refuse to pay for the services obtained.
An insurance company may also refuse to pay for medicated drugs if any other version of the same medication is available at a lower cost. All these terms and conditions are stated in the contract provided by the company.
Health insurance can be tricky but provides you with lots of choices. You have to consider and go through some important components of a health insurance company.
The first term you’ll come across when buying an insurance policy is premium, an insurance broker will explain in detail regarding the policies. The amount of money you are going to pay for the purchasing of an insurance policy is called a premium. You pay this amount every month to secure your medical treatments. It is the cost of your insurance plan. Monthly premiums have to be paid even if you never asked for the insurance money.
If you pay less amount of premium for your coverage, then you have to pay much more when you need health care. In short, you get what you pay. The lower your premium, the less coverage you’ll get. No matter what type of insurance you are purchasing, you always have to pay a greater premium for better and higher amounts of coverage. Your punctual premium amount keeps your health coverage fully active.
There is a certain time limit in which you are bound to pay your premium, and if you don’t, then the insurance company may string up your coverage.
The deductible is an annual amount you pay for your health care services. This is required by the insurance company for you to pay some amount each year before your insurance company shares the costs of your medical treatments.
The more you pay for your yearly deductible, the less you have to pay for your monthly premiums and vice versa. This helps you to share the cost with the insurance company for your medical treatments.
Now how deductible works?
Consider your insurance plan’s deductible is $5,000, and you somehow recently suffered from an injury. The insurance company will share the cost by paying coinsurance until the total amount of bills is $5,000, and if not, then you have to pay the whole cost of the bills on your own.
Coinsurance is a percentage that you have to pay for a medical checkup or treatment and the rest is paid by your health insurance plan. This is usually paid after the payment of the plan’s deductible.
How does it work?
Well, if you agreed on a coinsurance of 20%; then for any medical treatments like surgeries or hospitalizations, you pay only 20% of the bill. Your health insurance plan will pay the rest of the 80%. The 20% you pay is called your coinsurance. But, if you never paid the deductible, then you have to pay the full 100% amount of the bill.
The copayment is a fixed amount of fee that you have to pay for your health services. Especially when you visit a doctor or a physician because this certain amount is eligible to be paid at the time when the service is being taken. It is a set amount. The health insurance copay lets you know about the total amount that you have to pay when you visit a doctor. If the amount for a doctor’s visit is $30; then you have to pay that amount every time you go for a checkup. For this, you even have to fulfill your deductible first, or you will be paying 100% of the visiting amount.
The higher your monthly premiums, the lower your copayments will be. And vice versa.
So here’s the thing about networks. Hospitals, doctors, and health care professionals sign a contract with the health insurance plan to take medical care and provide prescriptions on the discounted fee to the policyholders.
Being a part of this policy helps you to pay 30% to 40% lesser than the actual regular fees of the provider. The health insurance negotiates with the doctors and the hospitals that are in their network.
When you go for a checkup in-network; your bills will be much cheaper than if you go for an out-of-network checkup.
The value of human life can never be undervalued. You have to protect it all cost, and for this, you have to get yourself a health insurance policy. There are greater chances of bankruptcy due to major accidents, illness, or serious conditions. It can cost you thousands of dollars in treatments or surgeries.
By being a member of a health insurance policy, keep your family and your loved ones safe and secure as it provides you with many facilities and advantages.