Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly. It is often included in employer benefit packages as a means of enticing quality employees. The cost of health insurance premiums is deductible to the payer, and benefits received are tax free.
Health insurance is a type of life insurance policy whereby insurance company is bounded to undertake a guarantee of compensation for medical expenses in case the policy holder falls ill, or had an accident which leads to hospitalization of the policy holder.
Some major types of health insurance include
- Family Health Insurance Plan: Under this policy, an individual can include all the family members against multiple diseases under a single cover. Family health plan offers a fixed sum assured for the family members, which can be availed by all members of the family or by any one individual in the family.
- Maternity Health Insurance Plan: This policy covers costs, including pre and postnatal care, child delivery expenses of newborn babies. This policy is also covered for the newborn up to a certain period of time as mentioned in the plan. Ambulance costs are also covered.
- Private health insurance: The Centers for Disease Control and Prevention (CDC) say that the U.S. healthcare system relies heavily on private health insurance. In the National Health Interview Survey, researchers found that 65.4 percent of people under the age of 65 years in the U.S. have a type of private health insurance coverage.
- Public or government health insurance: In this type of insurance, the state subsidizes healthcare in exchange for a premium.
- Managed care plans: In this type of plan, the insurer will have contracts with a network of healthcare providers to give lower cost medical care to their policyholders. There will be penalties and additional costs added to out of network hospitals and clinics, but they will provide some treatment. The more expensive the policy, the more flexible it is likely to be with the network of hospitals.
- Indemnity, or fee for service plans: Indemnity or fee for service plan covers treatment equally among all healthcare providers, allowing the insured to choose their preferred place of treatment. The insurer will typically pay for at least 80 percent of costs on an indemnity plan, while the patient pays the remaining costs as a co-insurance.
- Health maintenance organizations (HMOs): These are organizations that provide medical care directly to the insured. The policy will usually have a dedicated primary care physician that will coordinate all necessary care. HMOs will normally only fund treatment that is referred by this GP and will have negotiated fees for each medical service to minimize costs. This is usually the cheapest type of plan.
- Preferred provider organizations (PPOs): A PPO is similar to an indemnity plan, in that they allow the insured to visit any doctor they prefer.The PPO also has a network of approved providers with which they have negotiated costs. The insurer will pay less for treatment with out of network providers. However, people on a PPO plan can self-refer to specialists without having to visit a primary care physician.
- Point of service (POS) plans: A POS plan functions as a mix of an HMO and PPO. The insured can choose between coordinating all treatment through a primary care physician, receiving treatment within the insurer’s provider network, or using non-network providers. The type of plan will dictate the progress of treatment.
What Does Health Insurance Plan Cover?
One of the benefits of health insurance through the Marketplace is that all health insurance plans cover the same set of essential health benefits, even for a pre-existing health condition. In addition to coverage for doctor visits, lab tests, hospitalization, surgery, and emergency care, here are a few more:
- Pregnancy, maternity, and newborn care before and after your baby is born. You get this coverage even if you were pregnant before your coverage starts. Most plans also provide breastfeeding benefits.
- Preventive services for adults, children, and women. Women’s preventive services include well woman visits and contraceptive care.
- Mental health and substance abuse services, including behavioral health treatment like counseling and psychotherapy
- Prescription drugs.
There may be additional benefits of health insurance through the Marketplace, like plans that offer dental and vision coverage, and coverage for chiropractic or acupuncture services. You’ll see exactly what each plan offers when you compare them side by side in the Marketplace.
Benefits/importance of health insurance
Generally, insurance companies are collaborated with the leading hospitals so as to provide cashless treatment to the insured. In case the insurance company has no tie-ups with the hospital, they reimburse the cost of expenses incurred by the policy holder. The government also promotes health insurance by providing a deduction from income tax.
These are the major benefits/advantages of purchasing a health insurance care plan:
1. Coverage against medical expenses:
The main purpose of medical insurance is to receive the best medical care without any strain on your finances. Health insurance plans offer protection against high medical costs. It covers hospitalization expenses, day care procedures, domiciliary expenses, and ambulance charges, besides many others. You may, therefore, focus on your speedy recovery instead of worrying about such high costs.
2. Coverage against critical illnesses:
Insurance providers nowadays offer critical illness insurance, either as a standalone plan or as a rider. Such an insurance policy provides coverage against life threatening diseases such as kidney failure, bone marrow transplant, stroke, and loss of limbs, among others. Upon diagnosis of any of the critical illness from the predetermined list of your policy, you are entitled to receive a lump sum amount. This amount may be used to meet your illness-related treatment costs, daily expenses, and any other financial obligations.
3. Cashless claim benefit:
Many insurance providers offer cashless claim facility. In such an arrangement, you do not have to make any out of pocket payments. The hospitalization expenses are settled between your insurer and the hospital. To avail of this benefit, it is imperative to get admitted at any of the insurer’s network hospitals. You may fill out a pre-authorization form and display your health insurance card to enjoy the cashless facility.
4. Additional protection over and above your employer cover:
Many organizations cover their employees with a group insurance plan. However, such policies are not tailor-made according to the needs of every individual. Besides, you may be left uninsured in case of loss of job or change in employment. In order to protect yourself against such an event, purchase a health cover individually.
5. Tax benefits:
Health care plans provide tax benefits. Premiums paid towards your health care policy are eligible for tax deductions according to the laws governing that country.
6. Pre and post hospitalization cost coverage:
Health insurance policy covers pre and post hospitalization charges depending on the insurance plans purchased.
7. No claim bonus:
This is offered in case policy holders does not file a claim for any treatment in the previous years.
Some plans offer other health insurance benefits like reduced price for generic drugs and free disease management programs.
Keep these advantages in mind and choose from numerous medical insurance plans available in the market. Based on your personal needs and requirements, select the best plan and do not miss out on the opportunity to enjoy all these benefits.
- Quora – What-are-the-benefits-of-health-insurance
- Taxguru – 5-benefits-health-insurance
- Wikipedia – Health_insurance
- Healthcare – benefits-of-health-insurance-through-marketplace