Medical Insurance

Medical insurance is among the most common of the insurance policies, apart from those that are mandatory. Such policies can be obtained for a group of individuals or for a single person. In many cases, individual medical insurance policies are offered by the government itself under some social program. These generally charge lower premiums, than the ones charged by private insurance companies. If you go to buy a medical insurance policy, you may come across many terms that seem unfamiliar, let us try to understand the same, along with the working of medical insurance.

How Medical Insurance Works?

To have medical coverage, you need to pay a premium on monthly or yearly basis. The amount to be paid is calculated on the basis of risks to your health, any previous chronic conditions, the environment that you are exposed to, the amount of cover you wish to receive etc.

Apart from the premium, you will have to pay a yearly amount called as the deductible. This amount is calculated based on previous decisions and is to be paid for your medical insurance before any contribution from the insurance firm. In a similar manner, copayment refers to the amount you have to pay by yourself for each of your medical visits. Instead of copayment, which is a fixed amount, you can pay a fixed percentage of your medical expenses. This is called as coinsurance.

Exclusions refer to the medical services, that are not covered by the insurance policy. There is also a limit on the coverage that can be paid by the insurance firm and this is called as the coverage limit. If your medical expenses for any year exceed the coverage limit, you will have to pay the remaining amount by yourself.

In a similar manner, there is a limit to the maximum amount of money, that you have to pay out of your own pockets. This is called as the out-of-pocket maximum.
Capitation refers to the amount paid by the insurance firm to a particular medical facility, for the treatment of all the patients, who hold the firm's insurance policy.
If you take a medical insurance from a particular insurance firm, then you will have to go to a pre-selected medical facility for your treatment. Such a facility is called as the in-network provider. Also, before seeking any medical treatment, you need to obtain a prior authorization from the insurance firm. This document indicated that the insurer is bound to pay a certain pre-defined amount for your medical treatment.

Categorization of Medical Insurance

Medical insurance can be classified by various means. Your medical insurance provider may provide you medical service from an HMO (Health Maintenance Organization), PPO (Preferred Provider Organization) or through Point of Service Plans. In case of HMOs, the insurance firm assigns you to a particular health facility, where you can get your medical services. In case of PPOs, you have a choice of selecting your own medical service provider. Point of Service Plans implement a combination of HMOs and PPOs.

The insurance plans can also be classified as comprehensive and scheduled. Comprehensive plans cover all of your medical expenses including surgeries, medical emergencies etc. These are usually expensive. On the other hand, the more economical scheduled plans provide cover for periodic medical checkups etc. This cover is limited in nature and does not include the cost of surgeries and other expensive medical services.

Factors affecting Medical Insurance Premiums

A recent study that was carried out in the USA determined, that the increase in medical insurance cost was due to increased demand, availability of new and more expensive medical services, more intense testing etc. Also, in developed countries, larger number of people are living longer. Thus, there is an increase in the amount of medical care they require.

The more luxuriant lifestyle of most people these days, also has led to an increase in the number of health conditions like obesity, diabetes etc. leading to an increase in medical costs. On a personal level, how well you have maintained your health, will be the primary influence on the amount of premium, that you are charged.

Thus, medical insurance is always an option for you to consider, if you wish to avoid sudden expenses caused by medical emergencies. Choosing the right policy will ensure that you get the maximum benefit for the least cost.