What Does Health Insurance Mean?

Individuals with health insurance have access to medical care without being financially responsible for all of the incurred costs. There are different types of health coverages available that are bought privately or obtained through employer and government-sponsored programs. These coverages are chosen by individuals based on factors such as affordability, flexibility or its availability to those who cannot qualify for private or group health insurance.

Benefits of Health Insurance

• With health insurance, individuals and families are able to receive medical care when it is needed and not be responsible for all of the health expenses. Policies also pay for regular doctor visits which is vital to preventing major medical conditions from developing later. Health insurance plans also may provide prescription drug and dental coverage.

Individual or Group Health Insurance

• There are two ways insurance coverage is obtained: purchased directly from insurers or through employer-sponsored plans. There are advantages and disadvantages to each option. With private plans, insureds control the features of their policies, tailoring them to their benefit, whereas group plans provide 'one size fits all' coverage to their members. Policy owners can take their private plans with them when they change employers while workers lose their employer-sponsored coverage when they leave. For group plans, all applicants are accepted for coverage regardless of their medical conditions while those applying for private plans can be denied coverage if their health poses high risks to the insurers.

Private Health Insurance Options

• Individuals and families purchase two types of health plans directly from insurers. Managed health care plans provide affordable health care by negotiating the prices of medical services with groups of doctors in exchange for patients. Each member of the three managed health care plans -- HMO (Health Maintenance Organization), PPO (Preferred Provider Organization and POS (Point of Service) -- is given a network of these doctors to receive care from.

  Indemnity health plans allow members to see doctors of their choice. These are fee-for-service plans, which means insurers reimburse members after they pay for their medical services.

Government Health Insurance Options

• There are two government funded programs available to all citizens of the United States under the appropriate circumstances: Medicare and Medicaid.

  Medicaid is a federal- and state-run program that covers applicants whose income levels doesn't exceed eligibility guidelines or who are disabled.

  Medicare provides health care coverage for older citizens and those who have disabilities. Applicants must be 65 years of age or older, have end-stage renal failure or they could be under 65 if disabled. Medicare has two main parts: Part A and Part B. Part A covers services such as skilled nursing care and home health care while Part B covers regular doctor visits and outpatient hospital care.

Considerations

• Government-sponsored health plans such as Medicaid and Medicare Part A do not charge premiums to their members. Other plans do, such as all privately owned policies, group plans and Medicare Part B. In exchange for coverage, insurers charge premiums to policy holders. Premiums are based on the risks determined by the insurers; higher risk applicants are charged higher rates. However, policy owners can lower premium amounts by increasing their deductibles.