A health insurance policy is one of the most expensive acquisitions you would make in your life. It’s a contract that you make with an insurance company. This contract is usually for a limited term and it requires you to make a payment (premiums) to the insurance company, who then takes care of your medical needs and health care requirements. Health insurance safeguards you from heavy expenses in the event of a serious illness or hospitalization.
Components of a Health Insurance Policy
- Insurance Premium
Health insurance premium is the fee that you are required to pay in order to get coverage for treatments or medical expenses that are described in your policy. It’s an underwriting process where individuals who buy health insurance plans are put into different risk categories based upon gender, age and medical history.
Usually health insurance companies would require you to bear a portion of the risk by paying the initial medical costs up to an agreed level before the policy becomes liable for payment. So, as your deductible increases, the premium would decrease. These deductibles can be added to family groups or individual health insurance as well.
In addition, a policyholder is also required to pay a part of the cost of each treatment that is covered. However, the amount of co-payment per incident is not high enough for a substantial premium reduction.
This is a form of cost sharing for medical care, prescription drugs and other health services between the insurance company and the insured. However, you must know that the policyholder remains liable for a certain level of expense – in most cases 80%.
Health insurance policies generally do not cover all types of medical expenses. They eliminate coverage for certain acts, property and some companies also refrain from covering already existing medical conditions. For instance, most health insurance plans do not cover cosmetic and aesthetic treatments.
- Coverage Limits
Health insurance companies generally have a limit on the amount of liability they are exposed to, by having a maximum amount which they will pay for your medical costs. This is usually expressed in terms of sum assured under the policy.
- Out-of-Pocket Maximums
This applies to the policyholders’ maximum limit for payment. Once you reach your out-of-pocket limit then, the insurance company starts paying for all your future covered costs.
- Provider panels
This is one of the best benefits when it comes to health insurance policies. These are discounted fee payments that are negotiated between medical providers and the insurer.
In this process, a policyholder gets preauthorization or approval for a medical procedure or to see a specialist and the fee for the same is usually covered by the health insurance policy. But, most insurers would require prior approval before they agree to cover you for a visit or medical procedure.
- Explanation of Benefits (EOB)
Insurers usually send an explanation of benefits after it is approved by the insurer. An EOB describes what is excluded and what is covered, as well as the final fees, the fees paid by the insurance company and an explanation of how the different amounts are calculated.
Now that you have an idea about the components of health insurance policies, you can go ahead and buy a health insurance plan online. If you would like to learn more, it is advisable to get an expert’s opinion and gather more information on the subject.