A Short Guide to Buying Health Insurance

 

Healthcare insurance is a comprehensive insurance which covers a specific or a portion of an individual’s potential risk of incurring healthcare costs, spread over several persons. In simple terms it is a contract between you and the insurance company, in which you promise to pay regular premiums for a certain period of time. The period of time may be for one year or may be extended, depending on the insurer’s policy. This contract of course, becomes a financial protection against any unforeseen medical costs or diseases. Click here for more information Disability insurance.

The market for Health insurance is growing very fast indeed, and is expected to touch a whopping $ Piston of dollars by 2021. This huge growth is attributed to many factors. One is the fact that public health services are expanding at great rates due to government pressure on the matter, more people are becoming aware of their healthcare needs and wants, more people are taking it into their own hands by purchasing health service plans, and also the creation of large companies with extensive healthcare facilities. These large companies have a direct written premiums overhead, allowing them to offer better health service plans at lower costs. Some examples of these large conglomerates are hospitals and clinics, managed care, pharmaceuticals and biotechnology companies.

It is estimated that there are approximately 22 million Americans who are covered by private health insurance plans. Of this 22 million, almost half are covered by Medicare and the other half are covered by Medicaid. Another significant source of health insurance for the Americans is the State’s Medicaid program, which is a federal program run jointly by the federal government and the states. According to Kaiser, the direct written premiums estimate for this program is about $65 billion per year.

As an essential benefit of any health plan, direct written premiums includes an assortment of health insurance features like hospitalization benefits, critical illness coverage, emergency care, prescription coverage, dental coverage, vision care coverage, disability income, and behavioral health benefits. Many insurance providers will also cover other conditions, illnesses and medical treatments considered indirectly related to the services covered, such as childbirth or substance abuse. There are a few health insurance plans that do not offer any coverage for prescription drugs, while others do not cover dental services. Before purchasing any private healthcare insurance, consumers must carefully assess their needs, as not all health plans are created equally.

Private health insurance differs greatly from government health insurance. The primary difference between the two is the way how the insurance company calculates the premium amount. If for example, the insured is suspected of having high medical expenses after receiving a particular medical treatment, the insurance company will make up for the difference in medical costs by charging a higher rate to the insured for next year. But if the insured has low medical expenses and the next year, the rate will be lower. This is known as cost shifting.

Today, Americans spend more than any other country on healthcare coverage and the government is required to pay 50 percent of this total through taxes. The healthcare industry contributes directly to one-fourth of the U.S. tax revenue. Despite the many tax advantages, health insurance remains a complicated and highly regulated industry in the United States. The direct written premiums provision, mandated by the Health Insurance Portability and Accountability Act (HIPAA) of 1996, continues to be a major problem for both insurance companies and patients.

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