Easy Health Insurance Guide

As the business of providing medical services to the public gets larger and more complex, so do the insurance plans that help consumers pay for those services. By understanding the basic components to a health insurance policy and how those policies are designed and priced, your search for appropriate coverage should be less overwhelming.

Managed Care

• The vast majority of health insurance policies in force today utilize a "managed care" concept designed to reduce costs and increase the efficiency with which treatment is provided to consumers. Health insurance carriers establish networks of participating physicians and facilities and pay pre-negotiated rates for services to their insurance customers. The carriers then urge, and in some cases require, insurance members to seek treatment from participating providers.

Co-pays

• Nearly every health insurance plan requires at least a small payment from you every time you visit a physician. This fee is called a co-pay and typically ranges from $10 to $50. The balance of the actual cost of your doctor's office visit is paid by your insurance company.

Deductibles

• Many health insurance policies have deductibles that serve to reduce the monthly cost of the plan. The deductible is a fixed dollar amount that you must pay before the carrier begins contributing toward the cost of your care. It represents the portion of your treatment cost that is your financial responsibility.

Co-insurance

• An increasing number of health insurance plans utilize co-insurance as another way of reducing monthly premiums. Co-insurance amounts are stated in percentages and represent how responsibility for payment of your treatment is divided between you and the carrier. Common co-insurance amounts range from 10 to 30 percent but may be as high as 50 percent.

Maximum Out-of-pocket

• Considering the exorbitant cost of health care, it's easy to see how one catastrophic event could result in the accumulation of insurmountable medical bills. For this reason, health insurance policies contain "maximum out-of-pocket" figures, representing the most money you could possibly owe toward your care in a given year. If your spending reaches this level, any subsequent medical services are paid entirely by the insurance company.

Underwriting

• In the majority of states, the price of your health insurance plan is based on your medical history and the carrier's assessment of your risk profile. Applications contain medical questions designed to help the insurance company estimate how much you will utilize available benefits, and your monthly premium is adjusted accordingly. However, a small handful of states banned medical underwriting and implemented "guaranteed issue" provisions, making health insurance easier to obtain but significantly more expensive.

Pre-existing Conditions

• To prevent people from buying medical plans simply to obtain expensive treatment, health insurance contracts contain pre-existing condition limitations and exclusions. Treatment of any ailment for which you've received services in the past, typically the preceding six to 12 months, will not be covered by your policy for the first six to 12 months. Slight variations of these limitations exist between states as does the specific definition of what's considered a "pre-existing" condition.