There are lots of different types of health insurance. There are plans that cover medical services and prescription medicines, plans that cover dental expenses, disability insurance that replaces income lost due to extended illness or injury, long-term care, and so on.
Health insurance plans can sometimes bought by employers and offered to employees as part of their compensation, or "benefits".
Health insurance plans are usually sold once and then renewed annually. So when you buy a health plan, the insurer agrees to pay for health expenses as long as the premiums are paid on time and the account is in good standing.
There are two types of health plans: "Fee-for-Service" or "Managed Care". Both types of insurance cover major medical, surgical and hospital expenses. Fee-for-service plans pay the medical service provider a fee for each service provided to a patient, and that patient can usually go see whatever health care provider they wish. Managed care plans, on the other hand, pre-pay contracted providers for each member's coverage in advance. Members are offered a financial incentive to use providers who belong to the plan.
There are some terms floating around that you'll come across. It's important to know and understand what these are:
Deductible: This is the amount you must pay out-of-pocket before the insurer will pay anything. Deductibles can vary widely, ranging from $0 to a even few thousand dollars.
Co-insurance amount: This is the percentage of your medical expenses you must pay after you reach your deductible. This usually ranges from 10-30%.
Maximum out-of-pocket amount: This is the maximum amount you are required to pay in a given year, after which the insurer will pay 100% of the cost of covered medical expenses.
Covered benefits are the types of medical services the insurer will pay for.
Finally, exclusions are what medical services the insurer will not pay for.
While there can be a lot of jargon, and plans are difficult to compare, it's equally important and worth your time to check out every offer carefully. Review the plan descriptions and take your time to understand the coverage of any plan you consider purchasing. Make sure you get covered benefits that are relevant and useful to you and your family.
A great resource to compare different prices of health insurance plans is http://www.ehealthinsurance.com
