Understanding Health Insurance

Health insurance is insurance that covers the whole or a part of the risk of a person incurring medical expenses, spreading the risk over a large number of persons. The health insurance policy is a contract, that spells out what the insurance company will pay for and how much of the bill you will have to pay.

If you have health insurance coverage, whether through your employer or an individual health insurance plan, it’s essential that you understand the basics of health insurance and your plan. Once you’ve determined the type of coverage that meets your individual or family needs, you need to choose a suitable plan structure.

Health insurance

There are two main types of health insurance coverage: employer health insurance, or an individual/family plan.

  1. Individual Health Insurance: If you are enrolled in a health plan on your own and pay the premiums directly to the carrier, then you likely have an individual health insurance plan.
  2. Employer Health Insurance: If you are enrolled in a health plan through work, you likely have employer health insurance, also known as a group health plan or group health insurance.
Below is a list of 6 important points that should be taken into consideration while you are planning to buy a health insurance plan.
  • Scope and extent of coverage.
  • Exclusions.
  • The discounts and bonuses allowed.
  • Claim Settlement policy.
  • Network hospitals.
  • Company history.

Health insurance covers these costs and offers many other important benefits.

  • Covers essential health benefits critical to maintaining your health and treating illness and accidents
  • Protects you from unexpected, high medical costs.
  • You get free preventive care, like vaccines, screenings, and some check-ups, even before you meet your deductible.

You can use glossary to understand the terms related to medical insurance.

The earliest form of health insurance (aside from life insurance) was “accident” insurance. The true precursor to modern health insurance began in 1929 in Dallas, Texas. Justin Kimball created Blue Cross as a way for local teachers to pay a hospital 50 cents each month, so that when they later went to that hospital to have children, they wouldn’t be charged. This hospital maternity plan evolved to include sickness and injury care as it does today. It still only covered the hospital charges. Then Blue Shield was created to cover the growing expense of doctors’ care.

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