Insurance : Need of health insurance for life

A Health insurance policy
is a contract between an insurance company and an individual. The
contract can be renewable annually or monthly. The type and amount of health care costs that will
be covered by the health plan are specified in advance, in the member contract or Evidence of
Coverage booklet. The individual policy-holder's payment obligations may take several forms[4]:

Premium: The amount the policy-holder pays to the health plan each month to purchase health
coverage.

Deductible: The amount that the policy-holder must pay out-of-pocket before the health plan pays
its share. For example, a policy-holder might have to pay a $500 deductible per year, before any of
their health care is covered by the health plan. It may take several doctor's visits or prescription
refills before the policy-holder reaches the deductible and the health plan starts to pay for care.

Copayment: The amount that the policy-holder must pay out of pocket before the health plan pays
for a particular visit or service. For example, a policy-holder might pay a $45 copayment for a
doctor's visit, or to obtain a prescription. A copayment must be paid each time a particular service
is obtained.

Coinsurance: Instead of paying a fixed amount up front (a copayment), the policy-holder must pay a percentage of the total cost. For example, the member might have to pay 20% of the cost of a
surgery, while the health plan pays the other %80. Because there is no upper limit on
coinsurance, the policy-holder can end up owing very little, or a significant amount, depending on
the actual costs of the services they obtain.

Exclusions: Not all services are covered. The policy-holder is generally expected to pay the full cost of non-covered services out of their own pocket. Coverage limits: Some health plans only pay for health care up to a certain dollar amount. The
policy-holder may be expected to pay any charges in excess of the health plan's maximum
payment for a specific service. In addition, some plans have annual or lifetime coverage
maximums. In these cases, the health plan will stop payment when they reach the benefit
maximum, and the policy-holder must pay all remaining costs. Out-of-pocket maximums: Similar to coverage limits, except that in this case, the member's payment obligation ends when they reach the out-of-pocket maximum, and the health plan pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.

Prescription drug plans are a form of insurance offered through many employer benefit plans in
the U.S., where the patient pays a copayment and the prescription drug insurance pays the rest.
Some health care providers will agree to bill the insurance company if patients are willing to sign
an agreement that they will be responsible for the amount that the insurance company doesn't
pay, as the insurance company pays according to "reasonable" or "customary" charges, which
may be less than the provider's usual fee.
Health insurance companies also often have a network of providers who agree to accept the
reasonable and customary fee and waive the remainder. It will generally cost the patient less to
use an in-network provider.

Health Insurance companies are now offering Health Incentive accounts (HIA)[5], to reward users
for living healthy and making healthy choices, like stop smoking and/or losing weight, may get you
funds added into your Health Incentive Account, which may lower your out of pocket costs. The
health incentive accounts also carry over from year to year but once you leave the program you
lose those benefits in the HIA.
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Private: individually purchasedPolicies of health insurance obtained by individuals not otherwise covered under policies or programs elsewhere classified. Generally major medical, short term medical, and student policies. According to the U.S. Census Bureau, about 9% of Americans are covered under health insurance purchased directly.[14] The range of products available is similar to those provided through employers. Average premiums are generally somewhat lower than those for employer-sponsored coverage, but vary by age. Deductibles and other cost-sharing are also higher, on average, and the individual consumer pays the entire premium without benefit of an employer contribution.[21] Many states allow medical underwriting of applicants for individually purchased health insurance by insurance companies.
[edit] Private: long-term care insuranceLong-term care (LTC) insurance is growing in popularity in the U.S. Premiums have remained relatively stable in recent years. However, the coverage is quite expensive, especially when consumers wait until retirement age to purchase it. The average age of new purchasers was 61 in 2005, and has been dropping.

New types of medical plans in the U.S.One approach to addressing increasing premiums, dubbed "consumer driven health care," received a boost in 2003, when President George W. Bush signed into law the Medicare Prescription Drug, Improvement, and Modernization Act. The law created tax-deductible Health Savings Accounts (HSAs). An HSA is a private bank account which is un-taxed and only penalized if spent on non-medical items or services. It must be paired with a high-deductible insurance plan. HSAs enable mostly healthy people to pay less for insurance and bank money for their own health care expenses.[23] HSAs are one form of tax-preferrenced health care spending account. Others include Archer Medical Savings Accounts (MSAs), which have been superseded by the new HSAs (although existing MSAs are grandfathered), Flexible Spending Arrangments (FSAs) and Health Reimbursement Accounts (HRAs). FSAs and HRAs are typically used as part of an employee-benefit plan.[24]
Limited Medical Benefit Plans pay for routine care and do not pay for catastrophic care. As such, they do not provide equivalent financial security to a major medical plan. Annual benefit limits can be as low as $2,000. Lifetime maximums can be very low as well.