Health Insurance 101

Health insurance is sometimes referred to as Disability Insurance, Accident and Health or Accident and Sickness. These policies provide a wide range of benefits. Health insurance is available from commercial companies that sell policies to individuals and companies that provide group insurance.

Health insurance policies may cover any or all of the following:

Medical expenses that arise from illness or injury, Disability Income and Accidental Death & Dismemberment.

The Different Types Of Health Insurance Coverage Available

The insurer indemnifies (reimburses) the insured person on a "cost incurred" basis for amounts covered by the policy. Major Medical and Basic Medical Plans are reimbursement plans. The person insured is responsible for paying the hospital, doctor and other medical bills in reimbursement plans. Most individual health insurance policies are reimbursement contracts.

Disability Income

The insurance company pays the insured individual a "stated amount of money", regardless of the amount of the loss. For example, in a Accidental Death % Dismemberment policy, the loss of two legs would result in the principal sum being paid, and the Accidental Death & Dismemberment policy would pay the stated amount of the principal sum, regardless of the medical expenses incurred to treat for the dismemberment. Other valued policies are Disability Income and Life Insurance. A Major Medical Insurance policy is not a valued contract.

Fee For Service

In these cases, the insurance company pays those who provide the service such as the doctor, hospital, ect. directly for the services rendered. The claim payments do not pass through the hands of the person insured, but instead are paid directly to the company providing the service. The most common examples are Blue Cross & Blue Shield plans, known as "Health Care Service Contractor's." The medical care providers use a fee schedule and the subscriber must use a member of their network in order to be covered.

Medical Expense Policies

Medical Expense policies include Basic Medical, Major Medical and Comrehensive type insurance policies sold to individuals or groups of individuals. The Insuring Agreement covers a variety of medical expenses both in, out and on the way to the hospital. These following expenses must be deemed "medically necessary."

Physician charges, hospital room and board, radiology, ambulance, radiotherapy, x-rays, surgery, lab tests and prescription drugs.

Other expenses include Private Duty Nurse, Anesthetics, Medical Equipment Rental, Ambulatory Treatment and surgery.

The policy pays for coverage on an "usual and customary basis." If the doctor or hospital charges more than is customary for that medical problem, the policy will only pay what is customary. The insurance company only covers what are reasonable charges.

Basic Health Insurance Policies

Basic Medical Plans have low dollar limits of coverage. Also, no deductibles or coinsurance are used, which means it pays first dollar coverage, and pays only usual and customary fees. Basic medical features inside internal limits.

Basic medical insurance can include any or all of the following policies, which offer the same type of coverage as listed above for medical expense policies.

Basic Hospital Coverage

Pays a stated daily sum only while in the hospital, such as $200.00 per day for a limited number of days, like 60 or 90 days. This policy can be written alone or in combination with Medical Expense policies. This type of health insurance policy is a reimbursement contract.

Miscellaneous Ancillary Hospital Expenses 

Covers miscellaneous medical expenses including drugs, recovery rooms, physical therapy, operating rooms, x-rays and more, up to a specified limit, like $10,000.00. Coverage could be based on a multiple of the daily hospital benefit such as 20 times the daily benefit in the hospital income portion of the policy.

Surgery Expenses

Provides a schedule of benefits. This schedule gives the maximum dollar amount for each surgical procedure covered, also a reimbursement contract. Coverage is usually provided on an "absolute" basis, such as $2,500.00 for any given surgery performed. Coverage can be provided on a relative value basis. This is where each surgery is given a unit value that is proportional to the amount of dollar coverage. Then each unit value is multiplied by varying conversion factors to reflect regional differences in cost and professional expertise.

Be certain to check your health insurance policy thoroughly before buying it in order to get the exact amount of coverage provided.

Get a free Health Insurance Quote Right Now by simply clicking in the box above.