Lesson 1 - Insurance

• Describe what Health insurance contracts are, and how they work.

• Define premium, deductible, copayment, and coinsurance.

• Compare the different types of insurance enrollments.

Health care expenses make up about 16% of the United States’ Gross Domestic Product (GDP).

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Due to the cost of health care, a patient’s financial loss can be great.

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In the 1920s, The United States developed a system of health insurance to help cover the costs of medical expenses.

Health insurance is a contract between a patient and an insurance carrier.

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An insurance carrier is a company which provides insurance plans. The contract helps to protect the patient against financial loss when in need of health services.

The agreement between a patient and an insurance carrier states that if a patient needs health services, the carrier will pay a portion of the costs.

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To enter into this contract, the patient must pay a monthly premium. A premium is similar to a membership fee.

In return for the premium, the patient receives a policy. The policy states the terms of the insurance contract. Under this policy, the patient receives benefits, or reimbursements for specified services.

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If the insured wishes to extend coverage to family members under the same policy, they are called the beneficiaries.

Even with health insurance, patients still must pay some fees themselves. These expenses are called out-of-pocket expenses.

Out-of-Pocket expenses include:

• Deductible
• Exclusions
• Coinsurance or copayments

A deductible is a fixed amount of money the patient must pay for health care before the carrier will begin to pay out benefits.

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Deductibles must be met each year.

Coinsurance is a fixed percentage of the cost of service. For example, if insurance if takes responsibility for 80 percent of the cost. The patient must pay the remaining 20 percent.

A copayment is a set fee collected at the time of service. Some insurance policies require the patient to pay $15 or $20 for every regular visit to the physician. Unlike coinsurance, copayments are the same every time.

An exclusion is a provision within a health insurance policy that eliminates coverage for certain acts, property, types of damage or locations.

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As of 2014, all policies will be guaranteed issue and �pre-existing condition exclusions will no longer be allowed.

• Health insurance is a contract between a patient and a third party which acts to offset the costs of certain medical services.

• To receive benefits from an insurance carrier, the patient must pay a monthly premium and meet an annual deductible.

• After the deductible is met, most policies will also require the patient to pay either a coinsurance payment or a copayment for every service.