The Insurance Buying Guide: Medical Insurance
The most common form of health insurance is Medical Expense insurance, designed to insure you against sickness and accidental bodily injury. Medical Expense policies are of two types: Basic Medical Expense and Major Medical Expense.
Basic Medical Expense policies cover one of three expenses and include: hospital, physician and surgical expenses. You can purchase only one, or a combination of expense coverages. The hospital expense coverage includes room and board, including intensive care, operating room fees, lab fees and other necessary services and supplies. Rooms are limited to semi-private and, telephone and television charges are not covered.
Surgical expense coverage includes any doctor's fees related to surgery and coverage for various types of procedures based on the company's surgical schedule (the maximum amount payable for particular operations). While physicians expense is for any treatment by a physician not related to surgery.
Basic Medical Expense policies are usually written with deductibles ranging from $100 to $500 per calendar year. Once the deductible is met, the insurer pays the remaining costs in full, up to the policy limits. In contrast, Major Medical Expense insurance is aimed at catastrophic medical expenses.
Introduced nationally in 1951 by insurance companies, today virtually every health insurance company offers this policy. It's intended to cover serious illnesses and accidents that end up costing you thousands and thousands of dollars. As a result, they come with very high deductibles but also, very high limits. Sometimes up to $1million, which can mean a lot if you need a bone marrow transplant or cancer treatments over an extended period of time. They generally also have a co-insurance clause, meaning you must pay a portion of the covered expenses, usually 20 percent and then the insurance company pays the remaining 80.
Be sure to look for any limitations, however, since most medical expense policies limit the amount they will pay for such things as mental illness and drug or alcohol dependency.
There are two types of Medical Expense plans (Basic and Major Medical) and two types of Major Medical Expense plans (comprehensive and excess). The Basic Medical Expense policy offers primary protection for sickness and accidental injury while Major Medical Expense offers catastrophic coverage. Of the Major Medical Expense policies, one offers comprehensive protection so that basic coverage and extended health care benefits are integrated. The other is a supplement and provides excess coverage over the basic hospital/physician/surgical expenses. It basically "wraps-around" the primary policy and provides additional expenses.
All medical expense policies are almost always subject to either a deductible or a co-insurance payment. Generally, you have to pay a certain small amount (the co-payment) each time you see a doctor or have a prescription filled, and the insurer pays the rest of the money directly to the provider -- if you have assigned the benefits to the provider. If you haven't "assigned" the benefits, you will have to pay the provider directly and the insurance company will reimburse you later.
If you choose a reimbursement insurance plan, you will have to pay for any medical services up front, then fill out a claim form and send it to the insurance company. The company will reimburse you for a percentage of your expenses (often 80 percent) -- but only after you have satisfied the deductible.
