Medical insurance is a type of insurance that pays some or all of an insured person’s healthcare costs in exchange for a premium, which is typically paid monthly. Health insurance plans are available through private insurers and the government, as well as from employer groups, community organizations, and not-for-profit entities.
A key feature of medical insurance is that it helps control rising medical costs by reducing out-of-pocket expenses for the insured. One of the main ways that health insurance reduces out-of-pocket expenses is by negotiating with a network of providers, such as physicians, hospitals, laboratories, and pharmacies, to offer services at discounted rates. In addition, most health insurance policies include a deductible and coinsurance, which are the portions of the medical bill the insured person must pay before the health insurance plan starts to cover costs.
While some people might think that the deductible and coinsurance amounts are unreasonable, many medical insurance companies argue that they help keep overall health care costs under control. In addition, the deductible and coinsurance amounts only apply to services that are deemed appropriate by the health insurance company, which can limit unnecessary medical procedures and reduce overall costs.
Another major way that health insurance controls costs is by restricting the use of out-of-network providers. Most insurance plans have a list of preferred providers with whom they contract for discounted fees for their enrollees. These preferred providers are called “network” providers. A health insurance policy may also reimburse out-of-network providers for services based on the “reasonable and customary” charges for those services in the geographic area, which is often less than the provider’s actual charge.
There are also a number of different types of health insurance plans, with some plans requiring the insured to coordinate all treatment through a primary care physician and others allowing patients to self-refer to specialists. Additionally, some plans have different cost-sharing arrangements, such as copayments or coinsurance, which are the percentage of the medical bill that the insured must pay after meeting the deductible. Some plans also have an annual out-of-pocket maximum, which is the highest amount of cost sharing that a plan will require for a year.
It’s important to choose a plan with the most comprehensive scope of coverage to minimize out-of-pocket medical expenses during claims. Check if the plan has sub-limits on various expenses like room rent, ICU room rent, AYUSH coverage, domiciliary treatments etc. Moreover, choose a plan that doesn’t have the co-payment clause because it can increase your out-of-pocket expenses. Lastly, always compare the premium charged by the plan with other plans that have similar coverage benefits to see whether it is competitive or inflated given the coverage offered. Also, check the add-ons that the health insurance offers to enhance the scope of coverage.