Health insurance is a kind of insurance that provides full or partial coverage for a person’s medical expenses. The health risk is estimated and a certain amount of money is paid monthly to provide for the health insurance according to signed agreement. The insurance is generally administered by an organization such as a private firm or government agency. Several health insurance plans are made available such as Affordable Medicare Advantage Plans. Each individual signs up for them according to what suits their medical expenses and budget.
Obligations of health insurance
The obligation of an insured individual might be in various forms such as:
- Premium: This is the amount of money paid to the health plan agency for coverage of medical expenses by sponsor such as employer.This premium is calculated based on five factors which is accordance with the health care lawn the five factors include age, tobacco use, location, family enrollment and the specific plan the individual decides to make use of. The government is liable to pay a certain part or tax credit to cover a part of the premium for individuals who make use of private insurance via the insurance marketplace.
- Exclusions: In this case, not all services are covered by the insurance plan; hence the individual will have to pay for the total cost of the non covered services on their own.
- Deductible: This is the total amount of money the insured individual will have to pay before the health insurance agency pays its share. Each policy defers and it might take a very long time to reach the personal maximum target before the health insurance agency steps in.
- Coinsurance: This is quite similar to the deductible. The insured does not have to pay a certain amount of money up front before the health insurance agency steps in. They both pay at the same time but according to a certain percentage in accordance with services signed up for.
- Co-payment: This is very similar to deductible as well. It is the amount of money paid up front by the insured for a particular service before the insurance company steps in.
- Formulary: This is a list of drugs or medications that the insurance plan agreed to cover for. This list is generally comprehensive and the insured would have to pay for medications or drugs that do not fall under this list.
- Coverage limits: Some health insurance plans only cover up medical expenses up to a certain amount of money. The moment the limit is reached, the insured would have to pay for the remaining expenses out of their own pocket.
- Out of pocket maximum: This is quite similar to coverage limits. The amount of money expected for the insured to pay personally stops the moment they reach their out of pocket maximum and the insurance agency covers for any other future payments.
- Explanation of benefits: This is a comprehensive account on the total health insurance plan. It explains the amount of money covered for medical expenses,and how the payment and the obligated amount of the insured was calculated.