The purpose of medical insurance is to pay for some or all of the costs associated with illness and injury. Some common types of coverage include health maintenance organization plans (HMOs), preferred provider organizations (PPOs), and exclusive provider organizations (EPOs). Other types of coverage may include accidental death and dismemberment, disability, and specialized care for terminal illnesses like cancer. The cost of a health plan depends on factors like a person’s age, occupation, location and medical history. The type of care required also influences costs. For example, a person with a pre-existing condition is more likely to require costly hospitalizations and so is more expensive to insure than a healthy individual.
A health plan’s deductible, copayments and coinsurance all influence how much a policyholder pays for coverage. Deductibles are the amount of money a policyholder must pay before the insurance company begins to cover services. Copayments are fixed amounts paid for services, such as $20 per doctor visit or 30% of hospital charges. Coinsurance is a percentage of the total cost of care that a policyholder must pay in addition to the deductible. The insurance company covers the rest of the cost.
Some policies have an out-of-pocket maximum, which is the most a policyholder will have to pay in a year. This cap helps prevent people from running out of coverage and discourages unnecessary healthcare spending. In some cases, a plan may require the policyholder to obtain a referral from a primary care physician to see a specialist. These requirements can impact the availability and choice of healthcare providers.
In general, the older a person is, the higher their risk of medical problems and the more expensive the health insurance becomes. However, the specific risk varies from one person to another. A person’s family history is also important, as are other lifestyle and environmental factors.
The most common types of health insurance are health maintenance organization plans (HMOs), Preferred Provider Organizations (PPOs) and Exclusive Provider Organisations (EPOs). Some health care providers are not affiliated with any of these health insurance plans. These providers, called out-of-network providers, do not offer discounts or other incentives to patients to use their services. Generally, out-of-network providers charge more for the same service than in-network providers.
Other types of health care insurance include limited benefit plans, which are usually combined with a Health Savings Account (HSA). These are high-deductible health plans that can save the policyholder money by helping them avoid paying a deductible and out-of-pocket costs. A person should always carefully consider a policy before purchasing it. This includes evaluating the monthly premium, examining the benefits and limitations of the plan, and reviewing a list of providers. A good plan should offer affordable, comprehensive coverage. It should also offer lifetime renewability, which allows the policyholder to keep the same policy for a long time. A good plan should also have low customer complaints and a robust network of hospitals. Investopedia recommends checking for these qualities when comparing health insurance options.