How Health Insurance Works
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Health insurance is a vehicle where people pay a monthly amount called a premium to an insurance company and in return they get health coverage to varying degrees and within varying policies or programs.
The main concept is that this is protection against the high cost medical bills which may occur at any moment due to unexpected circumstances.
Policies vary. Some are designed just to handle the emergency. You pay your premium and have a high deductible amount such as 5 to 10 thousand dollars. Any medical expenses you incur up to this amount you pay on a routine basis. If an emergency occurs, then anything beyond that deductible amount would be covered by your plan based on how much the plan says it will cover. In other words you will always pay in full for your routine visits to the doctor, chiropractor, for vitamins, etc.
Other policies such as an HMO (health maintenance organization) provide medical services from a list of doctors or other medical service who participate in this type of plan. You don’t have full freedom to choose which medical professional you want to see as they have to be on the HMO list, but premiums are generally kept lower in this sort of plan. These types of plans are also often offered by employers to their employees as a group plan. In the United States in 1973 in became a requirement for employers with more than 25 employees to offer a health plan such as this. In this type of plan one typically has a primary physician who handles general medical needs, but then refers one to specialists as needed who are also part of the HMO.
There is also a PPO (preferred provider organization or participating provider organization). A PPO is a health or medical organization who have a relationship with the health insurance company to provide medical services. The insurance company then pays them and due to this arrangement they are able to lower rates.
It would stand to reason that generally unhealthy people would be more interested in purchasing health insurance as it is more likely that they would need the health or medical services and would benefit. If you have a pre-existing condition it may be difficult to obtain health insurance and if accepted premiums may be higher. Premiums also increase with age as the older one gets the more likely they are to have medical problems. At the same time generally speaking most people reduce their work load or retire and may be making less money which increases the burden on those needing or desiring health insurance.
There are other factors that may affect health insurance premiums. This would include the poor diets consumed by many which result in increased medical care needed throughout the populace and resulting in more people tapping into the insurance funds. There is also the fact that with the more advances in technology, the more potential services there are to keep one alive through medical or health services care, thus again the more potential of tapping into insurance funds.
For one looking at health insurance it can be a tough decision on which way to go with it. If you are an individual and not insured by your employer the premiums can be very high. Look at all your options and hopefully you make the best decision based on your circumstances.
About the Author
Shiv Majumdar runs a health insurance information site.
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Date: Thu, 2 Jul 2009 Time: 6:06 AM
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