Understanding the Basics of Medical Insurance

medical insurance

A medical insurance plan pays for a person’s health-related expenses in the event of an accident or illness. It also helps cover the cost of prescription medications and other healthcare related costs. This coverage may be provided by private insurers, or it can be provided by the government through a national or state-run program. Many health insurance plans have specific coverage limitations, and the type of treatment a person receives is usually determined by their medical history and a physician’s diagnosis.

While most people have heard of health insurance, few understand what it really means to have the proper medical coverage. In fact, a recent survey from the Commonwealth Fund found that one-quarter of all Americans have had gaps in their insurance. The good news is that with the proper understanding, these gaps can be filled.

When purchasing a health insurance policy, it is important to look at all the parts of the plan, including the annual deductible and co-payments. Also, the amount of money a person can save is often overlooked when comparing different plans. A premium is the monthly amount a person must pay to have the health plan provide coverage, and this is separate from out-of-pocket costs such as co-payments and deductibles.

The best way to avoid having these out-of-pocket costs is to find a plan with an annual deductible that is lower than what you can afford. However, this is not always the case, and a lower deductible does not mean that the premium is cheaper.

It is also important to consider if the provider network of the health plan will include your preferred doctors and hospitals. This is because a health insurance company will usually negotiate rates with in-network providers and this can result in the insured paying less for their care. In addition, some health insurance policies require a coinsurance, which requires the insured to pay a certain percentage of the cost of their care after reaching a deductible.

Health insurance also covers the costs of prescription medications, and there is generally a specific list that an insurer must approve before an individual can obtain the medication. This list is referred to as a formulary. The decision to approve a drug is typically made by comparing the cost of the medication against the effectiveness of the medicine, as well as evidence of its safety and efficacy.

It is important to understand that health insurance policies are regulated at the state level, and as a result, the details of each plan can vary significantly from one location to another. This can impact everything from the cost of the premium to the coverage limits and exclusions. For example, in some states, insurers have been limiting the use of prior authorization, which can cause delays in patients receiving the care that their physicians believe they need. This can be particularly dangerous for those with serious diseases, such as cancer. This was recently seen with a woman in California who died after her health insurance denied an MRI that would have identified a tumor that was pressing against her windpipe.