How Does Health Insurance Work?

The cost of health care in the country is always rising. This means that paying for medical procedures and drugs out of pocket can be financially crippling. Fortunately, there are many health insurance providers. When you are in good health, you should always keep in mind the fact that things might change one day. You may be diagnosed with a chronic illness that is costly to treat. You may also get into a car accident that may lead to serious physical injuries. That is why every individual who is in good health should buy health insurance before their health starts failing.

How Private Health Insurance Works

If you have been wondering – how does health insurance work? – you have come to the right place. An insurance policy is a contract between the policyholder and insurance company or underwriter. The policyholder agrees to pay insurance premiums in full or in installments. On the other hand, the insurer agrees to pay medical expenses incurred by the policyholder if and when they need medical attention. There are usually many exclusion clauses, so policyholders may need legal help to understand what is covered and what is not covered by their health insurance policy.

Health Insurance for Dummies

It is important to note that health insurance policies usually provide two types of covers. The first is inpatient while the other is outpatient cover. As the name suggests, outpatient cover applies only when the policyholder receives treatment and leaves the hospital or clinic on the same day. Before purchasing any policy, be sure to pay attention to the outpatient coverage limit.

Inpatient cover is the other type of cover provided by health insurers. As the name suggests, the patient has to spend at least one night at a medical facility to qualify for inpatient insurance cover. The coverage limit is usually huge, but should not be misused because you can never predict what will happen in the future.

Insurance Settlement

After getting admitted to a medical facility, the policyholder will have to produce their health insurance card and provide a few more details to enable admission. The insurer will be contacted to enable billing. After all, medical facilities do not usually want to wait until patients are discharged to get payment; they prefer settlement of bills on a daily basis as they are incurred. Upon discharge, the total cost incurred at the facility, including; doctor’s fees, nursing costs, meals, surgical procedures and medication will be computed and settled by the insurer.

If you’ve been wondering how does healthcare work, now you have a hint. It is important to note that you cannot take health insurance when you are sick. You have to buy the policy when you don’t need it to ensure you will get full benefits when you need it. If you wait until you have developed a medical condition to buy health insurance, private health insurers will explicitly state that they will not cover medical costs associated with the pre-existing condition. This means that you will have to opt for Medicare or Medicaid, or pay out of pocket.

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