Hassle-Free Health Coverage: Making Sense of Health Insurance
Health coverage refers to a collection of insurance policies and government programs which pay for a range of costs-from doctors and hospitals to more specific needs, such as long-term care expenses or disability insurance (which replaces lost income if you can't work because of an illness or accident).
Health insurance doesn't just cover medical expenses. It provides payment of benefits for the loss of income and/or the medical expenses arising from illness or injury. So, health insurance is sometimes called other things, like accident and sickness insurance or accident and health insurance. The different kinds of health insurance coverages vary according to the methods of underwriting, the injury or illness covered, types of insurers, types of benefits and services provided, types of losses covered, and the amount of benefits available.
When people refer to health insurance, they usually mean group insurance offered by employers-insurance that covers such things as medical bills, surgery, and hospital expenses. Insurance companies call this comprehensive or major medical coverage, because of the broad protection it offers.
When health insurance first appeared in the United States-in the mid-1800s-it was sold by casualty insurance companies on a stand-alone basis and as an add-on to life insurance policies. Early policies covered losses due to accidental injuries. Later ones provided benefits due to illness as well as accidents.
Today, health coverage includes insurance policies and government-provided benefits. Most consumers are familiar with some of these. The terms fee-for-service and managed care appear just about everywhere. The specific kinds of managed care plans- health maintenance organizations (HMOs), preferred provider organizations (PPOs), and pointof-service (POS) plans-are also fairly common. But what do these terms mean?
Both fee-for-service and managed care plans cover an array of medical, surgical, and hospital expenses. Most offer some coverage for prescription drugs; and some even include coverage for dentists and other providers. But because there are differences that will make one or another plan right for you, it is important to understand each kind of plan.
