Understanding Health Insurance Plans

Comprehensive health insurance that covered most medical treatments used to be known as "major medical" insurance.

Today, fee-for-service plans come closest to the old major medical plans. A revolution in health care delivery, driven by the need to reign in spiraling medical costs, has given us a new form of comprehensive health coverage known as managed care (HMOs and similar plans).

Nowadays, most plans require pre-authorization for many surgical procedures, and utilization review to determine whether a specific treatment is necessary.

No health plan will cover every medical expense. Unfortunately, very few plans cover eyeglasses and hearing aids, for example. And treatments deemed to be experimental may not be covered at all.

As with all types of insurance, coverage is available under either individual or group coverage. If you are self-employed or work for a small company, you may need to purchase an individual plan (don't be mislead -- an individual plan is purchased by an individual, but could cover an entire family). Should you work for a larger company, your benefits package may include health coverage available under a group plan with all premiums paid by your employer.

Out of pocket costs and premiums tend to be highest for fee-for-service plans, lower for managed care plans.

Other policies

"Hospital-surgical" policies, sometimes called basic health insurance, provide benefits when you are hospitalized because of a covered condition.

"Catastrophic" coverage pays hospital and medical expenses above a very high deductible -- $15,000 or more, but effectively has no cap (or an extremely high cap) on lifetime benefits. Catastrophic coverage can either supplement existing medical coverage where the lifetime cap on benefits is too low, or stand alone to protect against the financial ruin that can accompany catastrophic illness.

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