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Health Insurance

Health insurance is an insurance that covers the whole or a part of the risk of a person incurring medical expenses, spreading the risk over numerous persons. By estimating the overall risk of health risk and health system expenses over the risk pool, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to provide the money to pay for the health care benefits specified in the insurance agreement.[1] The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity.


A health insurance policy is:


    • A contract between an insurance provider (e.g. an insurance company or a government) and an individual or his/her sponsor (e.g. an employer or a community organization). The contract can be renewable (e.g. annually, monthly) or lifelong in the case of private insurance, or be mandatory for all citizens in the case of national plans. The type and amount of health care costs that will be covered by the health insurance provider are specified in writing, in a member contract or "Evidence of Coverage" booklet for private insurance, or in a national health policy for public insurance.
      (US specific) In the U.S., there are two types of health insurance - tax payer-funded and private-funded.[3] An example of a private-funded insurance plan is an employer-sponsored self-funded ERISA plan. The company generally advertises that they have one of the big insurance companies. However, in an ERISA case, that insurance company "doesn't engage in the act of insurance", they just administer it. Therefore, ERISA plans are not subject to state laws. ERISA plans are governed by federal law under the jurisdiction of the US Department of Labor (USDOL). The specific benefits or coverage details are found in the Summary Plan Description (SPD). An appeal must go through the insurance company, then to the Employer's Plan Fiduciary. If still required, the Fiduciary's decision can be brought to the USDOL to review for ERISA compliance, and then file a lawsuit in federal court.

    • Health Insurance Terms

    • Deductible

    A deductible is what you pay annually for health services before your insurance company pays its share. For instance, if you have a deductible of $1,000, your insurance plan might not start covering its share of your bills until you’ve paid $1,000 for healthcare in a given year. However, plans often cover the cost of things like preventive care doctor’s visits even before you’ve paid your full deductible amount.

      High Deductible Health Plan

    If you have a high deductible health plan (HDHP), you’re paying a larger deductible than most people. You’ll be paying more out-of-pocket and your insurance won’t cover much until your deductible has been paid in full. In exchange, your premiums won’t be as high and you will likely qualify for a health savings account that lets you save pre-tax dollars for covering medical expenses.

      Health Savings Account

    A health savings account (HSA) allows individuals to put in up to $3,350 (or $4,350 if you’re at least 55) in pre-tax dollars to be used for medical expenses. Your contributions lower your tax bill, and if you use the money for qualified medical costs your withdrawals will be tax-free.

      Premium

    Your premium is what you’ll pay the insurance company for the privilege of having an active insurance plan. Most people pay theirs every month, but your payments might be due once a quarter or once a year.

      Copayment

    The copayment (or copay) is the amount you owe each time you receive certain types of medical care. Copays can vary depending on the kind of service you’re getting. For example, you may have to pay a $30 copay for each visit to your GP and $60 for each visit to a specialist.



    • With a firm understanding of what the various healthcare buzzwords mean, you should be able to find a plan that meets your needs and fits within your budget. When shopping for health insurance, you’ll generally face a trade-off between high coverage and low cost.