Health insurance stands among the most precious forms of financial protection today because it promotes the management of some of the extremely exorbitant costs involved in medical treatments. Whether making consultations regarding simple matters or carrying out comprehensive surgeries, health insurance will see to it that you’re financially covered at any given time in the eventuality of healthcare needs arising. This article explores what health insurance is, how it works, the many types of it, among other key issues to help bring forth more knowledgeable choices regarding your health cover.
What Is Health Insurance?
Health insurance is an agreement between an individual or a group of people and the insurance provider, whereby the latter agrees to recompense specific health care costs in return for a premium. It covers the policyholder through reimbursement or direct payment to the practitioner, on medical and surgical expenses.
The policy basically acts as a kind of financial cushion wherein all sorts of healthcare needs-from check-ups at the general level to major surgeries and services-provided would not burden the sufferer with unpredictable medical costs. It can be as broad as hospitalization, drugs, ambulance services, and even pre- and post-hospitalization expenses upon the type of policy selected.
Health insurance is one of the most necessary coverages anyone and everyone needs to ensure that healthcare is readily available and affordable. This can also help in adopting preventive measures, wherein policyholders remain healthy by frequent checkups and preventive treatments such as vaccination.
Types of Health Insurance
There are different health insurance policies available for various needs. Some of the common ones include:
1. Individual Health Insurance
This cover is meant for one individual only, typically the policyholder. These are the best for those who will like to have their personal health cover. The usual cover consists of the following: hospitalization, doctors’ consultation, surgery, and drugs.
2. Family Floater Plans
There is the family floater plan under which an entire family is covered with one insurance policy. That is, the amount of insurance is shared by all members of the family, who may comprise parents, spouse, and children. It is a cost-effective mode for individual protection across the family.
3. Group Health Insurance
Group health insurance is normally provided by a job and covers all employees under one policy. Some employers even offer it to include their dependents. Group plans are hence convenient because they usually have lower premiums and no pre-existing waiting periods.
4. Critical Illness Insurance
The cover offered is on severe diseases like cancer, heart attack, stroke, and organ transplants. This type of insurance provides a benefit in the form of lump sum payback for any critical illness that can be used to remit the cost associated with treatment, rehabilitation, and all other costs of the illness.
5. Senior Citizen Health Insurance
These specifically include coverage for age-related medical disorders and, more than often, the plans tend to provide cashless hospitalization, no-claim bonus, and preventive health check-ups.
6. Maternity Health Insurance
This type of policy protects a person against all the expense that may be incurred due to pregnancy and post-delivery conditions. It often also covers services like prenatal care, delivery, and postnatal care. Even maternity insurance allows adding health coverage for the newly born up to a particular period.
How Does Health Insurance Work?
The working of health insurance is quite simple. Once one buys a policy and pays the premium, a policyholder acquires rights to a few benefits-for example, hospitalization, treatments, and drugs. Here is an easy, step-by-step explanation of how health insurance works:
1. Selecting a Plan and Paying the Premium
Once you get health insurance, you are required to pay premiums for keeping the policy live. The premium can be paid either monthly, quarterly, annually, or for every six months, or any time period in which one determines through agreement.
2. Activation of Coverage
Once the policy is activated, you can avail the benefits of having medical coverage. It may be in the form of hospitalization and consultancy in some plans and may include medicines and preventive care as well, based on the kind of plan.
3. Process of Claims
In the event that you incur some medical expenses, you can either seek cashless services at the network hospitals where the insurance company pays directly on your behalf or file a reimbursement claim .
4. Out-of-Pocket Expenses
Health insurance plans carry out-of-pocket expenses; these include deductibles, copayments, or coinsurance and are usually amounts that you must pay before the insurance coverage actually commences.
5. Waiting Period
There could be treatments or conditions that the policy does not cover for a stipulated waiting period. The most common examples of such waiting periods are waiting periods of pre-existing conditions or maternity benefits, which are generally 2-4 years long.
Health Insurance Functions
The role of health insurance is, therefore, core to saving individuals from expensive medical costs. At the same time, it helps the individual seek any required medical treatment without fear of cost. The major functions include;
Provide Financial Protection: Health insurance does not allow a medical cost to become a financial burden since health insurance covers much of hospitalization, surgeries, and treatments.
Cashless Services: As most of the insurance companies usually offer cashless treatment at network hospitals, the client is not required to pay a single dime to the hospital; instead, the insurer pays directly to the hospital.
Policies on Insurance Fostering Preventive Medication: These insurance plans provide preventive medication through frequent follow-ups, vaccinations, and other screening tests that are part of precursors to long-term health.
Existent sickness: Health insurance covers the treatment for an existing disease after the waiting period has elapsed, and therefore persons with chronic illness will be covered.
Pregnancy and newborn care: Some policies provide maternity care, including antenatal and postnatal care; some plans also offer newborn cover for the first months.
Benefits of Health Insurance
There are various benefits that people reap from health cover. Notably, these comprise:
Cashless Hospitalization: Most of the insurance companies have a network of hospitals that provide cashless facilities. There, the policyholder can go in for treatment to one of the tied up hospitals without having to pay the bill in advance, because the account is settled directly by the insurer with the hospital.
Cover for Existing Pre-existing Conditions: Health insurance policies cover diseases/ailments after a waiting period. This is particularly helpful to those suffering from chronic diseases.
A number of health insurance plans offer critical illnesses such as cancer, heart diseases, or stroke. At the time of detection, he receives a lump sum to treat himself or go to rehabilitation.
Maternity Coverage
Some health insurance plans pay for pregnancy and delivery with their maternity coverage. Prenatal and postnatal care are also included in the benefit package. Some even include coverage for the newborn for three months after delivery.
Most insurance policies include preventive care. Such a policy includes check-ups, vaccinations, and screening. This will ensure the health of a policyholder, hence early disease detection and treatment before much-harm accrues.
Waiting Period in Health Insurance
Waiting period refers to the time duration after which some benefits, as provided under a health insurance policy, do not exist. The most common types are pre-existing diseases, maternity benefits, and diseases like cataract or hernia. Here are a few types of waiting periods:
In most policies, the first waiting period is 30 to 90 days from when the policy has started. Only in emergency circumstances, such as accidents, will the above be applicable for any new policy.
Waiting Period for Pre-existing Conditions: Most insurance policies require an individual to wait 2-4 years before covering pre-existing conditions.
Waiting Period for Maternity: For maternity benefit, the waiting period of a policy containing such benefits is 2-3 years.
How to Choose the Right Health Insurance Plan
You would have only proper cover if you have the right health insurance plan for you and your loved ones. Here are some factors to use in choosing a plan:
Sum Insured: Sum insured is the amount that the insurer would pay for the covered expenses. Opt for an appropriate sum insured in view of the inflation that comes in your health care demands.
Network of Hospitals: Check whether the selected network of hospitals provides cashless facility through the company for whom you opt for insurance.
Waiting Period: In case you have some pre-existing medical conditions and even maternity cover, whether they are covered or not after waiting periods is to be verified.
Premium vs. Coverage: It is quite common to compare the premiums of different covers. But, while opting for an insurance, price cannot be the sole criterion for selection; assess whether the coverage meets your needs accordingly or not.
Claim Settlement Ratio: The claim settlement ratio of the insurer needs to be checked. It gives the percentage of claims settled by the insurer. The higher the ratio is, the better it is; it shows how reliable the insurer would be in processing the claim.
How Health Insurance Works
Health insurance is, as a concept, relatively a pretty simple scheme wherein the policyholder pays a premium to an insurance company with the promise of recompense for medical expenditures. Here’s a step-by-step explanation:
Premium Payable:
The person or family has chosen the plan and is paying premium. Premium payable is the amount that an insurer charges to a person for a certain period. Premium can be paid either monthly, quarterly or annual depending on the policy.
Activation of Coverage:
After the policy activates, the insured gets coverage benefit through the coverage for medicine. It ranges from visitation to minor doctors to complicated surgery based on various clauses at the time of purchasing the policy.
Cashless Treatment:
Most health insurance companies have a list of hospitals. Thus, for hospitalization or treatment, it directly pays the hospital through the insurance company and the insured need not pay upfront any of the expenses covered by it.
Reimbursement claims:
The insured will have to pay in advance at the non-network hospital selected by him. Subsequently, he can submit many documents, including medical reports and hospital bills, to the insurance company, which will reimburse him for the expenses incurred.
Out-of-Pocket Costs:
Out-of-pocket cost involves a deduction or co-payment, which is oftentimes tied to health insurance. The very simple meaning of a deduction is the money the policyholder must pay out-of-pocket before the insurance takes in and the meaning of a co-payment refers to the percentage of the medical bill that the insured pays.
There are some diseases and maternity benefits, which have a waiting period. This means they are covered only after a certain number of months have passed from the purchase of the insurance policy. It might take a few months to several years, depending on the policy.
Claim Settlement:
After a claim is raised, every detail of it is looked into thoroughly by the insurance company. They then settle the claim either at the hospital branch through cashless settlement or with the policyholder himself, depending on whether it is a cashless or reimbursement policy.
Why Do You Need Health Insurance Now?
What can be said for the importance of health insurance? There is little in this world today as uncertain as the present scenario with unnecessary medical emergencies popping up at every turn. Here are some reasons that make you need health insurance now:
Increasing Healthcare Cost:
Medical inflation has raised the healthcare cost to extreme levels. Some of the routine operations can turn out to be quite costly in the absence of insurance. Health insurance brings relief by canceling out such costs.
Uncertainty of Life:
Diseases can come through anytime. And in case of accidents or sudden diseases, people may have to go under hospitalization. Health insurance will help keep an individual ready financially for any such situation and will bring peace of mind to them.
Quality Medical Care through Access:
You would be covered through a good health policy that offered a wide network of hospitals providing cashless services. Hence, you would be able to get the medical care when you need it, and you do not need to arrange funds at the last minute.
A general package of services:
Benefits under a health insurance policy may include different services, like hospitalization, surgeries, drugs, and some or all the pre-and post-hospitalization services. Then comes the treatment and, if the health insurance plan allows it, preventive services. Comprehensive coverage assures medical attention at the right time.
Tax benefits:
In most places, premiums paid for health insurance plans come under tax deductions. And, therefore, once again, you save money.
In brief, it encompasses critical illnesses like cancer, heart diseases, and even organ transplants. Most health insurance policies today cover such fatal diseases. Such conditions may wipe out your savings, and you will not be able to take care of finances in the long run.
Protecting Your Savings:
Any medical emergency throws an agenda haywire and depletes the much-cherished savings. Health insurance protects the savings as it manages to cover such a large proportion of the bill. One can forget even the mere living beyond one’s pocket while keeping track of the chart.
Health Insurance Terms Related to Everyone:
Understanding health insurance calls for a familiarization of certain key terminologies that define the structure and working of policies. Here are a few essential terms:
Premium:
A fixed amount periodically paid to the insurance company by the insured for the maintenance of their health insurance cover. Often, most premiums are paid monthly or quarterly and in some instances, annually.
The deductible is the sum that the policyholder is supposed to provide before the insurance firm starts providing cover. For example, this can be applied as follows: If one has a deductible for $1,000, then every expense made in healthcare will be catered to by the insurance firm once that amount of healthcare services has been spent.
Co-payment Co-pay:
A co-pay is defined as the insured persons’ money contribution in reference to a given service. Generally speaking, co-pays usually concern those primary care services like the visitation by a physician or prescription filling with a doctor’s office, as covered by an insurance company.
Coinsurance- This is the percentage cost that the insured person has to pay following the deductible. For example, if the policy carries 20% coinsurance, then the insured will end up paying 20% of the medical bills, and the insurance will cover the remaining 80%.
Network Hospitals:
These are those hospitals with which there is an agreement by the insurance company for cashless treatment of the policyholders. Here, the bill will be directly settled by the insurance company with the hospital. And the insured need not pay upfront.
Existing Conditions:
This is the prevailing medical conditions that an insured individual had before acquiring his or her policy. Most of the insurance firms have a waiting period before they begin covering the costs related to existing conditions and such periods vary depending on the plan chosen.
Waiting period:
This is the period of time after purchasing a policy wherein no claim can be raise by the policyholder of some conditions or services. Usually, maternity benefits and pre-existing disease coverage fall under this waiting period.
The ones excluded:
These are the medical services or treatment that is not cover under any insurance policy. Among exclusions, there is an exhaustive list which would tell you what has not been cover under your policy. Such as a cosmetic surgery of some specific kind, or an experimental treatment.
Conclusion
Health insurance is an essential component of every financial planning: protection against some unexpected costs. Whether it is a doctor’s visit, surgery, or any other treatment, health insurance will provide you with financial assistance. Familiarity with the above three varieties of health insurance, including how they work and the benefits they offer, will enable you to make informed decisions regarding healthcare coverage.
The right choice of covers is sure to give appropriate care both to you and the family when need be.