Health insurance is a financial tool that provides financial coverage for medical expenses. A health insurance policy is a contract between the insurance company and an individual. The individual pays a premium to the insurer and the insurer offers financial protection against healthcare expenses to the individual in return.
Health insurance covers wide-ranging medical expenses like the cost of medicines, surgery, doctor's consultations, room rent, ambulance charges and more.
The growth of health insurance coverage is one of the most significant developments in the health-care field over the past decades. Private health insurance began to spread in the U.S. during the Great Depression as a number of hospitals began accepting premiums from local residents to cover any medical services provided. During this period, the American Hospital Association created Blue Cross insurance plans that allowed enrollees free choice among hospitals within a city. These insurance plans enjoyed a virtual monopoly position in the insurance market throughout the 1930s, but at that time premiums were very low. They grew more competitive following World War II when the federal government imposed wage and price controls. Unable to attract additional laborers with higher wages, employers offered benefits such as health insurance to circumvent the wage controls. The resulting boom in insurance coverage attracted commercial insurance companies to a market that had previously been dominated by the Blue Cross plans, thereby increasing competition. Today private health insurance is responsible for financing 36% of all health-care expenditures in the U.S. and provides coverage to 70% of the population (Santerre and Neun, 2007).
Types of Health Insurance
There are two basic types of health insurance:
1. Mediclaim Plans
Mediclaim or hospitalization plans are the most basic type of health insurance plans. They cover the cost of treatment when you are admitted to the hospital. The payout is made on actual expenses incurred in the hospital by submitting original bills. Most of these plans cover the entire family up to a certain limit.
2. Critical Illness Insurance Plans
Critical Illness Insurance Plans cover specific life-threatening diseases. These diseases could require prolonged treatment or even change in lifestyle. Unlike hospitalization plans, the payout is made on Critical Illness cover chosen by the customer and not on actual expenses incurred in the hospital. The cover gives the flexibility to use the monies for changing lifestyle and medicines. Also it's a substitute for income for the time you could not resume work due to illness. Payout under these plans are made on the diagnosis of the disease for which the original medical bills are not required.
Types of Health Insurance based on sponsorships:
Employer-Sponsored Health Insurance: Many individuals receive health insurance coverage through their employers as part of their employee benefits package. Employer-sponsored health insurance plans may offer various options, including preferred provider organization plans, health maintenance organization plans, or high-deductible health plans with health savings accounts.
Individual Health Insurance: Individuals who do not have access to employer-sponsored health insurance or who are self-employed can purchase individual health insurance plans directly from insurance companies or through health insurance marketplaces established under the Affordable Care Act. Individual health insurance plans offer coverage for individuals and families and may include options such as catastrophic coverage, bronze, silver, gold, or platinum plans with varying levels of coverage and premiums.
Government-Sponsored Health Insurance Programs: Governments may offer health insurance programs to provide coverage for specific populations, such as Medicare for individuals aged 65 and older, Medicaid for low-income individuals and families, Children's Health Insurance Program for children from low-income families, and military health insurance programs such as TRICARE for active-duty service members, veterans, and their families.
Why Should I Have A Health Insurance Policy?
Health insurance is of paramount importance for individuals and families, offering various benefits that contribute to overall well-being and financial security. Here are some key reasons why health insurance is essential:
- It facilitates you to get superior medical treatment without any worry of high medical costs.
- Offers specialized coverage for critical illnesses.
- Covers road emergency ambulance costs.
- Offers an affordable premium for youngsters.
- Provides cashless claim benefit, which allows you to take care of your health instead of worrying about hefty medical bills.
- Protect your savings during medical emergencies.
- Provides tax benefits under Section 80D.
- Lastly, it safeguards you and your family and protects your savings.
Many health insurance plans utilize provider networks, which are networks of doctors, hospitals, clinics, and other healthcare providers that have contracted with the insurance company to provide services to policyholders at discounted rates.
Depending on the type of health insurance plan, policyholders may be required to choose healthcare providers within the network (in-network providers) to receive maximum coverage or may have the option to seek care outside the network (out-of-network providers) at higher out-of-pocket costs.
- The Range of Plans Offered
- The Network of Hospitals
- Claim Settlement Ratio
- Claim-Based Loading
- Premium Rate
- Ease of Claim Settlement
- Reviews