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How Health Insurance Functions For Consumers |
By:
Chris Channing |
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How Health Insurance Functions For Consumers
Chris Channing
The type of insurance that pays for a person's medical expenses is known as health insurance. It can be purchased as premiums so the holder is defended from medical expenses due to illness or injury. A person can purchase social insurance, the insurance that is sponsored by the government, or receive insurance from a private insurance company. Plans such as these can be purchased by an individual or in group packages by companies as benefits to their employees.
The price of healthcare is estimated by the amount of risk the insurance holder has to be in need of medical care. A young healthy insurance holder will likely have a lower premium than an elderly holder who is more likely to fall victim to illness or injury.
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.
Health insurance works by the insurance company selling a policy to the insurance holder. A policy is a contract between the individual and the company stipulating the size and cost of the plan. This contract is renewed either annually or monthly. The amount the policy holder owes to the insurance company annually or each month is called the premium.
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.
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 almost the opposite of coverage limits are called out-of-pocket maximums. These maximums are the amount that the policy holder is allowed to pay by themselves. After this limit is exceeded the obligation the insurance holder has to the insurance 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 can be found on a list that was made by the insurance company. If the insurance holder goes to one of these healthcare providers they can receive discounts or additional benefits to the policy.
Moral hazard is a problem faced by insurance companies and policy holders everywhere. Moral hazard occurs when the healthcare provider and the insurance holder agree to tests that are deemed unnecessary by the insurance company. Most of the time the insurance company is still forced to pay for the expenses but this can cause problems between the company and the insurance holder in the future.
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Article Source: http://www.statssheet.com/articles/article79416.html |
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