Health Insurance – Meaning, Types And Cost

Definition And Types Of Health Insurance

 

Meaning Of Health Insurance

Health insurance is a sort of insurance that helps pay for medical and surgical expenses for an insured person.

A clinic, hospital, doctor, laboratory, healthcare practitioner, or pharmacy that offers treatment for an individual’s ailment is referred to as a “provider” by insurers.

The “insured” is the person who has health insurance coverage or is the owner of the health insurance policy.

Learn more about health insurance, why it’s necessary, the many types of plans, and the laws that govern it in this article.

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Definition And Types Of Health Insurance

Depending on the type of health insurance coverage a person has, the insured either pays out of pocket and is reimbursed, or the insurer pays the provider directly. 

Health insurance is typically included in employee benefit packages in nations lacking universal healthcare coverage, such as the United States.

According to the Kaiser Family Foundation, the number of individuals without health insurance declined by almost 20 million after the Affordable Care Act was enacted in 2010, reaching its lowest level ever in 2016. (KFF).

 

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However, between 2016 and 2019, the number of adults without health insurance increased by 2.2 million, from 26.7 million to 28.9 million. Between 2016 and 2019, the number of persons without health insurance increased from 10% to 10.9 per cent. However, the percentage of Americans who have health insurance is still higher than it was before the Affordable Care Act was enacted.

 

Definition And Types Of Health Insurance

According to a 2012 Commonwealth Fund research, one-quarter of all Americans of working age had a gap in their health insurance coverage. When respondents in the poll lost their employment or changed jobs, many of them lost their health insurance.

According to the KFF, Black individuals and those with low incomes are more likely than other groups to be without insurance.

The quality of care received in emergency rooms varies greatly depending on the type of health insurance a person has.

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Types Of Health Insurance

Private and public (or government) health insurance are the two main categories. There are a couple more particular types as well. Each of these will be examined in greater depth in the sections that follow.

1. PRIVATE HEALTH INSURANCE

The United States’ healthcare system, according to the Centers for Disease Control and Prevention (CDC), is mainly reliant on private health insurance. According to the National Health Interview Survey, 63.7 per cent of adults under the age of 65 in the United States have some form of private health insurance coverage.

2. PUBLIC OR GOVERNMENT HEALTH INSURANCE

The state subsidizes healthcare in exchange for a premium with this sort of insurance. In the United States, public health insurance includes Medicare, Medicaid, the Veterans Health Administration, and the Indian Health Service.

3. OTHERS

Some individuals describe an insurer based on how it manages its plans and interacts with providers. Here are a few samples of the various types of plans that are accessible.

 

• MANAGED-CARE PLANS

The insurer will have contracts with a network of providers to provide lower-cost medical treatment to its policyholders under this type of plan. Out-of-network hospitals and clinics will face penalties and increased fees, but they will still be able to provide certain treatments.

The more expensive the program, the more flexible the network of hospitals is likely to be.

 

• INDEMNITY PLANS, OFTEN KNOWN AS FEE-FOR-SERVICE PLANS

, This type of insurance reimburses you for the services you get.

A Fee-for-Service plan covers all providers equally, allowing the insured to choose their preferred treatment location. On an indemnity plan, the insurer normally pays 80% of the costs, with the remaining 20% paid by the individual as coinsurance.

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Plans for the Health Maintenance Organization (HMO)

These are organizations that give direct medical care to insured people. A dedicated primary care physician will normally be assigned to the policy and will coordinate all necessary care.

 

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HMO plans will normally only pay for care that has been recommended by a family doctor, and they will have negotiated pricing for each medical service to keep expenses down. This is usually the most affordable option.

 

HMO (HEALTH MAINTENANCE ORGANIZATION) PLANS

In a similar way to an indemnity plan, a Preferred Provider Organization (PPO) plan allows the insured to see any doctor they want. In addition, the PPO plan includes negotiated rates with a network of recognized providers.

Treatment from out-of-network doctors will cost the insurer less. People with a PPO plan, on the other hand, can self-refer to specialists instead of seeing a primary care physician.

 

Plans for point-of-service

 

A Point-of-Service plan is a hybrid of a health maintenance organization (HMO) and a preferred provider organization (PPO). The insured can coordinate all treatment through a primary care physician, receive treatment from inside the insurer’s provider network, or seek treatment from non-network physicians. The therapy progress will be determined by the type of plan they have.

Definition And Types Of Health Insurance

 

What is the significance of the type of insurance plan?

The sort of plan a person has determines how they will obtain the treatment they require and how much money they will be required to pay on the day of treatment.

The US Congress introduced the Health Savings Account in 2003. (HSA). It’s a hybrid of a health maintenance organization (HMO), a preferred provider organization (PPO), an indemnity plan, and a tax-advantaged savings account. In 2020, however, a policyholder must combine this with an existing health plan with a deductible of more than $1,400 for individuals and $2,800 for couples.

 

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HSAs can supplement coverage, allowing existing plans to cover more therapies. The contributions to an HSA made by an employer on behalf of their employees are tax-free. While a person is well, they can save money in an HSA to use in the event of a medical need later in life.

People with chronic diseases, such as diabetes, may not be able to save a significant amount in their HSA since they must pay substantial medical bills on a monthly basis to manage their health condition.

Definition And Types Of Health Insurance

These plans frequently have very high deductibles, which means that, while premiums may be lower, customers will often be responsible for the full cost of any required medical treatment.

As plan types evolve, there is increasing overlap. The lines between policy kinds are becoming increasingly blurry.

To control costs and ensure that there are enough resources to pay for proper care, the majority of indemnity plans employ managed care approaches. Many managed care plans have taken on some of the characteristics of fee-for-service programs as well.

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