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Health Insurance

Health insurance, also known as health coverage, covers a substantial fraction of medical expenses in the event of a sickness or injury.

What is It?

Health coverage is an agreement where a buyer pays monthly premiums in exchange for less out-of-pocket cost to receive general and specialized care.

Who is it For?

Health coverage is advertised for everyone. Those proving insufficient income are eligible for government help that make premium and other insurance payments more affordable.

How it Works

Besides monthly premiums, other expenses are listed below:

•Deductible that must be paid before insurance reimbursement is activated.
•Copays and coinsurance stated as a dollar amount or percentage of above-deductible medical expenses.

Assume coverage with a $10,000 deductible and 20 percent copay. An illness that costs $65,000 to cure breaks down as follows:

•$10,000 deductible that is entirely the insurance buyer’s responsibility
•20 percent of the remaining $55,000 healthcare costs are $11,000.

Excluding premiums, out-of-pocket expense would be $22,000.

Different Types of Coverage in Existence

“Low cost” options give lower premiums in exchange for larger out-of-pocket expenses in the event of a claim. Conversely, larger monthly payments correspond to much greater extent of coverage. In the above example, if the deductible had been $2,000 and the copay 10 percent, the buyer’s total obligation on a $65,000 bill would be $8,300 instead of $22,000.

Major Benefits

The benefit of health coverage is that the large cost of unexpected sickness and injury is blunted by insurance reimbursement. Even a small percentage difference in copays or a relatively small difference in deductibles can result in major savings in the event of a high-cost medical crisis.

Summary

Health coverage is important and most necessary precisely when it is most difficult to obtain. The cost of premiums and, in the event of a claim, deductibles, and copays, are offset by the fact that most of the total cost of quality care is handled by the insurer instead of becoming an ongoing burden for a sick individual.






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