by
Crown Financial Ministries
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Today, health insurance is a basic need. Even though health care costs have been increasing over the past two decades at about twice the rate of inflation, they are projected to surge even more over the next several years, according to a new study from the Institute for Health Services Research at Tulane University.
This means that a major illness, or a number of minor ones in a short period can destroy the family budget and perhaps bring on unmanageable indebtedness. As such, few families can scarcely afford the cost of even one hospital stay.
However, with adequate health insurance, the risk of financial disaster from a costly illness or accident probably can be avoided.
So, not only does medical insurance represent good, logical planning for most Americans, it also makes good health care possible for families that otherwise could not afford professional medical care.
Although there are hundreds of different policies and plans for health insurance available, generally health insurance that covers the cost of treatment associated with an illness or accident is divided into five types: basic hospital expense, surgical expense, regular medical expense, major medical expense, and comprehensive medical expense.
Basic hospital coverage
Basic hospital expense insurance that covers the hospital's charges for room and board and nursing services may also cover additional expenses, such as emergency room treatment, ambulance transport, operating room, lab fees, X rays, and medicines.
Benefits are usually limited to a certain amount and to a certain number of days in the hospital. Some policies have deductibles and exclusions and limitations.
Surgical expense coverage
Benefits for surgical expense coverage are paid according to a predetermined schedule of fees that states the maximum payment for each kind of procedure.
Fees for office visits to doctors before and after the procedure, as well as services of a second surgeon and an anesthesiologist, many times are included in the coverage. Frequently, surgical insurance is purchased in combination with a hospital expense policy.
Regular medical expense coverage
Regular medical expense coverage may provide reimbursement for doctors’ services other than those connected with surgery, co-payment of doctors' visits, diagnostic and laboratory tests, and co-payment of medicines.
These policies usually include a dollar maximum as well as a deductible and co-payment clause. Frequently, this insurance is purchased in combination with hospital expense and surgical expense coverage.
Major medical expense coverage
Major medical coverage is insurance designed to cover the huge expense of a catastrophic or prolonged illness or accident. It includes hospital, surgical, doctor, and other medical treatment not covered by other types of health insurance.
This kind of policy usually includes a large deductible, which can range from $300 to $1,000 or more, and a coinsurance provision that requires the insured to pay anywhere from 10 to 30 percent of the claim.
A stop-loss feature usually sets the maximum the insured must pay on a claim. Generally, there is a maximum amount of benefits for each policy.
If an insured cannot afford health insurance, it would be wise to buy a major medical expense policy with high deductibles and low premium payments. This at least would cover the insured for a serious illness or accident, and the money saved on premiums could be used for minor health care.
Comprehensive medical coverage
This is a plan that combines the features of all of the basic medical expense coverage and major medical coverage. It generally has a coinsurance provision and a deductible clause in which the insured patient pays a certain percentage of the bill, depending on the policy.
Like major medical expenses insurance, the maximum lifetime benefits are usually very high.
Group or individual policy?
Although a great number of people in America buy health insurance through a group plan offered by their employers, statistics recently released by the Health Ensurance Coalition (HEC) say that over the past decade an average of 37 percent of employers of five employees or more do not offer health insurance to their employees.
HEC further discovered that over the past decade an average of 75 percent of the nation’s uninsured have a job or are dependents of someone who holds a job.
Employers who offer group coverage offer it as a fringe benefit. Premiums under a group plan are usually lower than those for individual coverage. The employer usually pays all or part of the premium for the employee.
With an individual health insurance policy, you have the opportunity to choose the benefits you want.
Although individual health insurance premiums will be based on your age, sex, and physical condition, as well as the amount of coverage you want, the premiums will usually cost the insured anywhere from 50 to 90 percent more than a similar policy with a group.
Shopping around for cost and value is very important with health insurance. Costs for almost identical policies may vary as much as 50 percent from one company to another.
Managed care plans
In recent years there has been an increase in movement toward managed-care-type health care plans.
The goal of these plans is to cut costs by negotiating with physicians and hospitals a reduced charge for services rendered.
There are three different kinds of managed-care-type plans: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Point of Service (POS).
HMOs negotiate with employers to take care of all of the health needs of the employees. The employer must use the HMO’s doctors, hospitals, and clinics.
The employer enrolls as a member of the HMO by paying a fee. This fee usually covers all medical expense needs for the employer. Most HMOs insist upon co-payment of some provided services.
PPOs are similar to HMOs from the standpoint of negotiated charges. The main difference is that the employer and its employees can choose the physician they want to see.
There are member and nonmember physicians and hospitals. If the employee chooses a member provider, his or her out-of-pocket expenses will be less than if he or she chooses a nonmember provider.
POS plans allow an insured to choose his or her primary physician. This physician will have agreed to discounted fees for services.
The insured then would have to see this physician for all aliments first in order to receive the highest discount. If the insured decides to see a specialist on his or her own, the out-of-pocket expenses will be greater.
Other medical coverage
There are dozens of other types of health care coverage options. The health care options that are typically used by individuals are accidental death and dismemberment insurance, specific disease insurance, hospital indemnity insurance, disability insurance, Medicaid, Medicare, and Medicare supplement.
Accidental death and dismemberment insurance covers reimbursement for medical costs resulting from accidents. The amount of reimbursement is usually determined by the policy’s limitation schedule.
Specific disease insurance provides an unallocated benefit that is paid directly to the insured. The amount is subject to a maximum amount for expenses incurred in connection with the treatment of specific dreaded diseases, such as cancer. Although the premiums are generally low, it is not considered a good insurance purchase.
Hospital indemnity insurance or income plans provide a stipulated daily, weekly, or monthly benefit during confinement to a hospital only. Many of these types of policies do not start paying benefits until after you have been in the hospital for five days or longer. Since the average hospital stay in America is less than five days, the insured seldom collects on the benefits.
Medicaid pays medical bills for low income people who can’t afford the cost of medical care. It is a government-sponsored program with strict guidelines for eligibility. To determine whether you qualify, contact your local pubic health or welfare office.
Medicare is a government-sponsored program for most people who are age 65 or older and for some disabled people.
It is a two-part program. Part A provides hospital benefits for short-term illness. It also provides some benefits in a skilled nursing facility or at home.
Part B is optional medical insurance. You can have the premium deducted automatically from your Social Security check, if you receive one. Part B pays for most medical and surgical fees. Because it is inexpensive, it is an excellent value.
Medicare supplemental insurance is designed to take up where Medicare leaves off. It is a relatively inexpensive insurance for the amount of coverage it provides, which usually includes the whole range of health problems.
Conclusion
God created us to live in a physical world in which there are things beyond our control, such as accidents and diseases. The treatment for these can cost hundreds of thousands of dollars.
With the exception of those people who are under conviction not to have any form of insurance, health insurance is a reasonable and logical expenditure. However, health insurance is a very sizable expense most families must bear.
A group insurance plan through your company is by far the least expensive health insurance plan. If you are not covered by a group insurance plan, look for a major medical coverage that has a very large deductible and only begins to pay after that deductible has been met out of your pocket—meaning it provides for catastrophic medical expenses only. Because few families can afford the cost of a hospital stay, medical insurance represents good planning.
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