Health insurance is the type of insurance that pays for a person’s medical expenses. It is paid for individually as premiums in order to defend the holder from large medical expenses due to injury or illness. A person can purchase social insurance which is sponsored by the government can be employed, or a customer can employ a private insurance company. These plans can be bought on a single plan basis, or in group plans, such as a benefit company purchase for their employees.
The estimated price of healthcare is found by the likely hood that the customer will be in need of medical attention. A healthy young insurance holder will most likely pay less that an older sickly insurance holder.
Health insurance was founded by Hugh Chamberlen in 1694. Accident insurance was the label originally given the idea. It was run similarly to the way disability insurance is today.
The amount the insurance holder is forced to pay before the insurance company will pay their share is called the deductible. In some cases a co-payment must be paid by the holder out of their own pocket. This can be done each time the policy holder goes to the doctor for a visit. This can all be avoided by the policy holder purchasing coinsurance. This plan allows the holder to pay only a certain percentage of the total cost of their medical expenses.
The amount the insurance holder must pay in order for the company to pay its share is called a deductible. In some cases a co-payment must be paid by the insurance holder with his or her own money. This could be done each time the insurance holder goes to the doctor for a checkup. An insurance holder can avoid this by purchasing coinsurance. With this plan the holder pays a certain percentage of the total cost of his or hers medical expenses.
All policies have limits and exclusions. Not all services are covered by the insurance company. If a situation in which a medical expense is not covered the policy holder will be forced to pay the bill with their own money. When the medical expenses of the policy holder surpass the amount agreed upon in the policy the holder will be forced to pay the remainder of the bill.
Maximums that are basically the opposite of coverage limits are referred to as out-of-pocket maximums. These maximums are the amount that the policy holder is allowed to pay on their own. After this limit has been exceeded the obligation that the insurance holder has to the company stops. Capitation is the amount of money paid by the insurance company to the provider of the healthcare. In-network providers are healthcare providers that are found on a list that was made by the insurance company. If the policy holder uses one of the providers on the list they can receive discounts or extra benefits.
One problem that the insurance company and the insurance holder must be wary of is moral hazards. Moral hazards occur when the health care provider and insurance holder agree to tests on the patient deemed unnecessary by the insurance company. In most cases the insurance company will be forced to pay for the expenses as long as they are covered by the insurance holder’s policy. There is a growing demand for insurance companies to fight moral hazard and will probably become a greater issue in the future.
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This post was written by Chris Channing on May 13, 2008
