Health Insurance

Health Insurance is designed to cover the costs of private medical treatment for curable short-term illness or injury (acute conditions); it provides financial security for your family by providing financial resources for health expenses. In its most basic terms it is insurance against loss by sickness or bodily injury. It can protect you from the risk of uncertain bills for heath care and can also pay for services that you use often. Health insurance can help you to get better quality care as a member of a co-ordinated health plan, than you would do on your own (or from the NHS). Without health insurance you may not be able to afford expensive services, health insurance offers security.

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Health insurance policies vary greatly when it comes to what they cover. As with most forms of insurance some policies will cover you for some events and exclude others depending on what type of policy you buy. Health insurance will typically cover for treatments of short-term (acute) medical conditions, in-patient tests, surgery, hospital accommodation and nursing. Most policies will also sometimes include cover for out-patient tests, out-patient consultations with a specialist, overseas cover, cash payments for treatments received as a NHS in-patient, doctor visits, preventative care, diagnostic tests, emergency, prescription drugs and home health care to mention a few. A really good health policy should cover as many of these areas of cover as possible however you may find that the cost of the premiums will reflect this and hence will be more expensive. If you want to cut the cost of your premiums then you need to decide which aspects have more priority for you and purchase a policy that suits your needs. Bear in mind that health insurance doesn’t cover health care for medical problems or conditions that start before the moment you have you policy – this is also known as pre-existing medical conditions. If you have a pre-existing condition check your policy carefully as chances are you won’t be covered for any medical treatment relating to this.

There are two main types of health insurance: Indemnity (also known as ‘traditional’ or ‘fee-for-service’ policies) and Managed Care policies.

Indemnity insurance focuses on the treatment of unexpected illnesses, and usually allows a patient total control over choice of physician. Usually, Indemnity plans offer more choice of doctors, hospitals and other health care providers than managed care however they are usually the most expensive type of policy. When it comes to making a claim, your insurance will pay roughly 80% of the medical bills and then it is up to you to pay the remaining 20%. However, compared to Managed Care plans, you have much more choice when it comes to which doctor you see.

Managed Care plans generally cost less than Indemnity plans; however you are more restricted when it comes to choosing your own care (doctors/hospitals etc). All Managed Care plans will try to steer a patient towards a pre-approved network of doctors and facilities. Of course you are able to seek treatment outside the ‘network’ but this coverage is limited, and you will pay less if you go to someone within the insurer’s ‘network’. Managed Care plans are usually more focused on preventative care than Indemnity plans (whose focus tends to be treatment).

There are 3 main types of Managed Care policies: HMOs, which are the least expensive but also the least flexible of insurance plans; POS, which are more flexible than HMOs but which also require you to select a primary care physician; and PPOs which give the policy holder a financial incentive – reasonable co-payments to stay within the insurer’s network of practitioners.

HMOs offer their customers low co-payments, minimal paperwork and coverage for many preventative-care and health-improvement programs but you must choose a primary care physician (PCP) and must get a referral from your PCP in order to see a specialist. HMOs require you to see only network doctors otherwise they don’t pay.

With POS policies you may choose to visit a doctor outside the network but the amount covered is a lot less than if you stayed within the network, however you must receive permission from your PCP before you do this otherwise you may end up footing the bills yourself. With PPO policies you can see any doctor within the network but may have to foot the bill if you see someone outside the network.