The Purpose of Healthcare Insurance

About one out of every six Americans does not have health insurance, according to a July 2009 Gallup poll. Many people receive health insurance coverage from their employers to cover themselves, their spouses and children. Others pay for health insurance on their own, with no help from their employer. People get health insurance for routine office visits, chronic conditions and emergency treatment.

Routine Care

• Some people get health insurance so they can visit their doctor for regular checkups or other routine care. A regular checkup at a doctor's office can cost hundreds of dollars without insurance coverage and more if vaccinations or tests are required. With health insurance, you typically only pay a co-pay, if anything at all. Co-pays are predetermined amounts that designate how much a visit to the doctor's office costs. These typically range from $10 to $50 per visit, though some policies do not require you to pay anything for routine care.

Emergencies

• Health insurance also protects you from high medical bills due to emergency treatment or other major surgeries or procedures. You cannot plan on a medical emergency; and if you go have one without insurance, you will likely be left with a hospital bill for thousands or tens of thousands of dollars. Health insurance will cover most or all of the bill for you once your deductible has been reached. A deductible is a predetermined amount of money you have to pay out-of-pocket before the insurance kicks in. For example, assume you underwent an emergency procedure, and the bill was $20,000. If your deductible is $1,000 and your coverage is 90 percent after the deductible, you would owe $1,000 plus $1,900 (10 percent of the remaining balance). While $2,900 is still a lot of money, it is much better than owing $20,000. Once the deductible is met cumulatively over the year, you do not have to pay it again until the next year starts. Also, some policies have a maximum out-of-pocket amount for the year; so if your maximum out-of-pocket amount is $2,500, then you would pay that amount and not owe anything else on medical procedures for the rest of the year.

Prescriptions and Medication

• Health insurance also helps pay for medication. If you take medication regularly, the costs can add up quickly. Most health insurance plans cover a majority of the cost of generic prescription medications, so your prescription refills every month only cost you $10 or $20 as opposed to $100 or more. Exact costs depend on your insurance plan and the type of medication, but for the most part, health insurance will help cover prescription medication, which saves you out-of-pocket medical costs.

Peace of Mind

• Health insurance gives many people peace of mind that should a medical issue arise, most of the expenses are covered. This is especially true for parents and families of young children. Kids get sick, need vaccinations and are prone to childhood injuries; health insurance allows parents to take care of these expenses without breaking the bank.