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Health Insurance - Common Requirements

A good health insurance policy contains several types of coverage. Basic insurance includes hospital, surgical, and physicians' expense coverage. In addition, major medical coverage is necessary in case of a catastrophic accident or illness. These may be purchased separately, but you will generally get more complete coverage if they are combined in a single policy. Your policy should discuss the cost of each type of coverage and describe exactly what each pays for.

Your health insurance policy also contains important information regarding your out-of-pocket costs, namely deductibles and co-payments. The family coverage provisions will be important to you as well, if your spouse or dependents are covered by the policy. Information about out-of-pocket maximums and benefit ceilings should also be included.

Basic coverages
Hospital expense insurance
Hospital expense insurance pays your room and board costs if you are hospitalized. Some plans pay on an indemnity basis, meaning the insurer pays a specific amount per day for a specified maximum number of days. Other plans may pay on the actual charges, or a percentage of the actual charges, regardless of what those charges might be. In addition to room and board, hospital expense insurance typically covers incidental expenses, such as use of the operating room, x-rays, drugs, anesthesia, and laboratory charges.

Surgical expense insurance
Surgical expense insurance pays surgeons' fees and related costs associated with surgery. Related costs might include fees for an assistant surgeon, anesthesiologist, or even the operating room if it is not covered as a miscellaneous hospital item. Surgical expense benefits are generally paid according to a set schedule, although some plans pay surgical benefits based on what is considered "usual, customary, and reasonable" (UCR) in a particular geographic area.

Physicians' expense insurance
Physicians' expense insurance, sometimes called "regular medical expense insurance," pays for visits to a doctor's office or for a doctor's hospital visits. Typically, the policy specifies a maximum benefit per visit, as well as a maximum number of visits per injury or illness.

Major medical insurance
Major medical insurance is designed to protect you against losses from catastrophic illness or injury. It is usually an extremely broad policy with a very high maximum benefit. Most major medical policies provide at least $250,000 of coverage, although $1,000,000 or more in coverage is preferable. Although coverage can vary from one plan to another, the following list features items that are included in most major medical policies:

  • Hospital services and supplies (medical and surgical)
  • Hospital room and board, including intensive and cardiac care
  • Physicians' services (diagnostic, medical, and surgical)
  • Nursing services
  • Other medical practitioners' services
  • Anesthesia and anesthesiologists' fees
  • Ambulance service
  • Laboratory and diagnostic tests, including x-rays
  • Radiology and other therapy
  • Blood and plasma
  • Oxygen
  • Dental treatment resulting from injury
  • Prescription drugs
  • Outpatient services
  • Convalescent nursing home care
  • Home health care
  • Purchase of prosthetic devices
  • Casts, splints, and crutches

Deductibles, co-payments, and coinsurance
Your health insurance plan will include information about deductibles, co-payments, and coinsurance requirements. These can greatly affect the overall cost of a health care plan. The deductible is the amount that you have to pay towards your medical expenses (usually annually) before the insurer begins to pay claims, while the co-payment is the amount you'll have to pay each time you visit a health insurance provider. Coinsurance is the percentage of your medical costs you'll have to pay after you satisfy any deductibles that apply.

Out-of-pocket maximum
Also called a "stop-loss" or "coinsurance maximum," this provision limits your liability for medical expenses. Imagine, for example, you run up $1,000,000 in medical bills. If you're required to pay 20% of your medical costs after you satisfy your deductible, you'd end up paying $200,000. Most people could not afford to pay this much. A good health insurance plan might pay 80% of the first $10,000 and 100% of any further expenses. Thus, your maximum liability would be $2,000 (plus any deductible).

Benefit ceiling
The benefit ceiling, or "maximum lifetime payout," is the maximum amount the insurance policy will pay. Most experts recommend a policy with a benefit ceiling of at least $1,000,000. While this may seem like an exorbitant amount, keep in mind that the expenses resulting from a catastrophic illness or injury can certainly reach this level.



Please Note: The information contained in this Web site is provided solely as a source of general information and resource. It is a not a statement of contract and coverage may not apply in all areas or circumstances. For a complete description of coverages, always read the insurance policy, including all endorsements
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Copyright © 2005 Oleg Skurskiy Authorized Independent Agent, CA License 0E50389