All There is to Know about Health Insurance Coverage

Advances in medical technology equal better care — and rising health care costs. Health insurance coverage protects you and your family from the high costs of medical bills. In order to make the most of your insurance, take an active role in managing your health care. One of the best ways to do this is by becoming an informed consumer and learning how health insurance coverage works.

Health insurance coverage pays for expenses you incur when you seek treatment for an illness or a non-work-related injury. Depending on the type of plan you have, medical insurance coverage generally pays for diagnoses and treatment of medical conditions. Every plan is different; as a consumer, your job is to choose the coverage that best works with your finances and requirements.

Some people receive insurance coverage through their employer or other organizations; this is known as group coverage. Employers often pay a portion of the premium, or cost of the insurance, as part of an employee benefits package.

Those without access to employer-sponsored medical insurance coverage choose to purchase private policies — known as individual health insurance — through an insurance company or broker. Though you are responsible for paying the premium, you may be able to deduct some of the cost from your taxes.

Others receive insurance coverage through government-administered programs. These include Medicaid, Medicare and the U.S. Department of Veterans Affairs.

Though the range of medical insurance coverage options is quite diverse and can even seem a bit overwhelming, the California Department of Insurance categorizes health insurance coverage into four general types, including:

  • Indemnity policies
  • Health Maintenance Organizations or HMOs
  • Preferred Provider Organizations or PPOs
  • Self-Insured Health Plans

Until the late 1970s, most Americans had indemnity insurance, also known as traditional or fee-for-service. This type of health coverage allows you to choose any medical provider you wish. You pay for the service up-front, then seek reimbursement from the insurance company by submitting a claim for covered services.

Indemnity policies often have deductibles, or an amount you must pay before the plan reimburses you. Even after your meet the deductible, some indemnity plans only pay a percentage of medical bills; you are responsible for the rest, known as coinsurance. However, many indemnity policies also limit your annual out-of-pocket expenses; once you reach that amount, your health insurance coverage plan pays the rest.

Health Maintenance Organizations — also called HMOs — require you to choose a primary care physician from within a preapproved network. If you seek medical services from a non-network provider, you’ll pay more — or even all — of the bill, unless you first obtain a referral from your primary care physician. If you have a medical emergency, you can go to non-network hospitals without a referral, but you’ll probably have to contact your HMO within a limited time to make sure the insurance coverage will pay for treatment.

Preferred Provider Organizations — also known as PPOs — offer health insurance coverage plans that combine elements of indemnity and HMO policies. You don’t have to choose a primary care physician, but you do have to use providers from within a preapproved network. Out-of-network visits cost more; in fact, some PPOs won’t pay at all if you receive care from a medical provider that’s not on the preferred list.

Self-insured health plans — also called single employer self-insured plans — are often offered by unions, school districts, local government agencies and other large employers. Most self-insured plans contract with a third-party administrator, often an insurance company, to manage the plan and administer payments and claims.

Whether you have the option of choosing from several individual health insurance coverage plans, are covered through a group insurance policy or are insured by a government-administered plan, it’s important to research the specific details of your policy. Don’t be afraid to ask questions: More information leads to better healthcare choices for you and for your family.