About Medical Coverage

You fall off your bike and sprain your wrist, or you find yourself on the receiving end of a car wreck. One of the first thoughts that goes through your mind may very well be, "How am I going to pay for the treatment of these injuries?" Fortunately, if you have the foresight to carry medical coverage, your insurance company will help keep your out-of-pocket expenses manageable.

Purpose

• The purpose of medical insurance is to provide financial security against medical expenses that could otherwise lead to financial hardship. When many healthy people pay premiums to an insurance company, the insurance company is able to use those funds to pay the expenses for any of its members facing medical bills.

Types

• There are three types of medical insurance: group insurance, individual insurance and temporary insurance. You usually purchase group insurance through an employer or membership organization. It allows people of different health backgrounds to buy the same policy at the same price. You usually purchase individual insurance directly from the company. Temporary insurance is for transitional periods--if you were between jobs, for example.

Structure

• You pay for your medical coverage through your insurance premiums, co-pays and deductibles. Premiums are the monthly amount you pay to maintain your policy. A co-pay refers to the amount you pay out of pocket for doctor visits or prescriptions--your insurance company pays the balance. For major medical coverage, a co-pay may be the percentage of expenses you pay out of pocket after your deductible is met. Your deductible is the amount you pay out of pocket annually before your insurance company begins to pay expenses.