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- The policy sets terms for the health insurance coverage
- Health insurance makes health care costs more affordable
- Policies are often designed for individuals or groups of employees
- Health insurance policies cover treatment for illnesses and injuries
- Most payments are based on deductibles, co-payments, and premiums
According to healthcare.gov, health insurance can be defined as a contract requiring health insurers to pay a part or all of a party’s health care costs in exchange for paying a premium.
Health insurance is typically offered on an individual or group basis. Individual health insurance is defined as a state-regulated policy designed for someone that is not connected to a job-based coverage.
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Understanding Health Insurance Policies
Job-based health insurance coverage is typically offered as a group plan. Group health plans are offered by employers or employee organizations that provide health coverage to employees and their immediate relatives.
Individual and group health insurance plans are structured around a policy year or plan year that starts on the first day the member receives insurance coverage and ends 12 months later.
The Marketplace for Health Insurance Policies
The Health Insurance Marketplace is where individuals shop for and enroll in affordable health insurance. The federal government operates the marketplace established by the Affordable Care Act. Small business use the Small Business Health Option Program Marketplace, typically referred to as SHOP.
Qualifying for a Health Insurance Policy
Individuals applying for a health insurance policy in the federal marketplace are required to provide household information. These people have the opportunity to find out if they qualify for savings like premium tax credits or coverage through the Children’s Health Insurance Program known as CHIP or Medicaid.
How Health Insurance Policies Work
Depending on the type of policy, the insurer either makes direct payments to the provider or they provide reimbursements for out-of-pocket costs paid by the policyholder. Most health insurance policies define a provider as being a hospital, clinic, laboratory, doctor, pharmacy or health care practitioner.
The health insurance policy is designed to provide the insured with coverage for a variety of different medical and surgical expenses incurred throughout the year.
Health policies are binding contracts that typically covers the insured for treatments received due to injuries or illnesses. For policies providing individual coverage individual coverage, members can pay the insurers premiums directly or have it paid with an automated payroll deduction. Insurance companies typically charge policyholders higher premiums to extend their individual coverage to their family members.
Paying on a Health Insurance Policy
When individuals sign up for a policy, the premiums, copayments, and deductibles are all predetermined. The premium is the amount the insured pays for health insurance each month.
The deductible is the amount the insured must pay before the insurer begins to pay, and the copay is a fixed amount or percentage the insured must pay for specific health services once the deductible has been paid.
Understanding the Terms of the Policy
Health insurance policies may be renewed on a monthly basis, an annual basis or they may be lifelong. The policy specifies in writing the different types and amounts of health care costs covered by the health insurance plan. These terms in the member’s contract are typically provided as evidence of coverage in the private insurance booklet or national publication.
Group plans are often sponsored and self-funded from employers according to the laws established by the Employee Retirement Income Security Act. Group plans are subject to federal laws that fall under the jurisdiction of the Department of Labor. The specific coverage details and benefits offered in group plans are typically provided in the Summary Plan Description.
The Limits of Health Insurance Policies
The insured are typically still expected to pay full price for any treatment received for health services excluded in the policy’s terms. In addition, policies may contain coverage limits that set a ceiling on the amount the insurance company will pay for different health care services.
The policy may also include out-of-pocket maxims that set a maximum price on what the policyholder will pay for certain types of services over a predetermined period.
Finding Providers for the Policy
Many policies offer the insured discounted co-payments and additional benefits for receiving treatment from an in-network provider. Most policies provide members with a list of pre-selected in-network providers who provide treatment in the local area.
The in-network providers already have contracts with the insurer to provide discounted rates in comparison the usual and customary rates charged by providers outside of the network.
Having a Health Insurance Policy
In some countries, citizens are expected or required to have a health insurance policy. The Affordable Care Act levied a tax penalty against citizens who failed to get a life insurance policy within the predetermined enrollment period. Even with the public option, citizens typically have the option of getting a health insurance policy through a private insurer.
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