8 types of health insurance

Health insurance is a form of insurance that is used to pay for the treatment and diagnosis of certain medical conditions. In the United States, health insurance is any program that helps pay for medical expenses, whether through privately purchased insurance.

Social insurance or a social welfare program funded by the government. Synonyms for this usage include “health coverage”, “health care coverage” and “health benefits”. In a more technical sense, the term is used to describe any form of insurance that provides protection against the costs of medical services. This usage includes private insurance and social insurance programs such as Medicare , which pools resources and spreads the financial risk associated with major medical expenses across the entire population to protect everyone, as well as social welfare programs such as Medicaid and the Children’s Health Insurance Program, which provide assistance to people who cannot afford health coverage.

Two broad types of health insurance or health coverage

Broadly speaking there are two types of health insurance:

Private health insurance – the CDC (Centers for Disease Control and Prevention) says that the US health care system is heavily reliant on private health insurance. 58% of Americans have some kind of private health insurance coverage.

Public (government) health insurance – for this type to be called insurance, premiums need to be collected, even though the coverage is provided by the state. Therefore, the National Health Service (NHS) in the United Kingdom is not a type of health insurance – even though it provides free medical services for its citizens, it does not collect premiums – it is a type of universal health coverage.

Other types of health insurance are as follows:

Hospital indemnity insurance

Hospital indemnity insurance provides a fixed daily, weekly or monthly benefit while the insured is confined to a hospital. The payment is not dependent on actual hospital charges and is most commonly expressed as a flat dollar amount. Hospital indemnity benefits are paid in addition to any other benefits that may be available and are typically used to pay out-of-pocket and non-covered expenses associated with the primary medical plan, and to help with additional expenses (e.g., child care) incurred while in the hospital.

 Long-term care insurance

This is a type of health insurance that reimburses the policyholder for the cost of long-term or custodial care services designed to minimize or compensate for the loss of functioning due to age, disability or chronic illness. [124] LTC has many surface similarities to long-term disability insurance. There are at least two fundamental differences, however. LTC policies cover the cost of certain types of chronic care, while long-term-disability policies replace income lost while the policyholder is unable to work. For LTC, the event triggering benefits is the need for chronic care, while the triggering event for disability insurance is the inability to work.

 Individually purchased health insurance in the United States

According to the US Census Bureau, about 9% of Americans are covered under health insurance purchased directly. The range of products available is similar to those provided through employers. However, average out-of-pocket spending is higher in the individual market, with higher deductibles, co-payments, and other cost-sharing provisions. Major medical is the most commonly purchased form of individual health insurance. Although a major medical health insurance policy is primarily a catastrophic plan, qualified preventive benefits are still covered at 100% without any waiting period or copay.

In the individual market, the consumer pays the entire premium without the benefit of an employer contribution. While self-employed individuals receive a tax deduction for their health insurance and can buy health insurance with additional tax benefits, most consumers in the individual market do not receive any tax benefit.

Premiums vary significantly by age. In states that allow individual medical plan underwriting, premiums also vary by health status. However, with the Patient Protection and Affordable Care Act, effective since 2014, insurers are prohibited from discriminating against or charging higher rates for individuals based on pre-existing medical conditions.

Children’s Health Insurance Program

It is a joint state/federal program to provide health insurance to children in families who earn too much money to qualify for Medicaid, yet cannot afford to buy private insurance. The statutory authority for CHIP is under title XXI of the Social Security Act. CHIP programs are run by the individual states according to requirements set by the federal

Centers for Medicare and Medicaid Services, and may be structured as independent programs separate from Medicaid (separate child health programs), as expansions of their Medicaid programs (CHIP Medicaid expansion programs), or combine these approaches (CHIP combination programs). States receive enhanced federal funds for their CHIP programs at a rate above the regular Medicaid match

Disability insurance

Disability income (DI) insurance pays benefits to individuals who become unable to work because of injury or illness. DI insurance replaces income lost while the policyholder is unable to work during a period of disability (in contrast to medical expense insurance, which pays for the cost of medical care). For most working-age adults, the risk of disability is greater than the risk of premature death, and the resulting reduction in lifetime earnings can be significant. Private disability insurance is sold on both a group and an individual basis. Policies may be designed to cover long-term disabilities (LTD coverage) or short-term disabilities (STD coverage). Business owners can also purchase disability overhead insurance to cover the overhead expenses of their business while they are unable to work.

Dental insurance

This insurance helps pay for the cost of necessary dental care. Few medical expense plans include coverage for dental expenses. About 97% of dental benefits in the United States is provided through separate policies from carriers—both stand-alone and medical affiliates—that specialize in this coverage. Typically, these dental plans offer comprehensive preventive benefits. However, major dental expenses, such as crowns and root canals, are just partially covered. Also, most carriers offer a lower rate if you select a plan that utilizes their Network providers. Discount dental programs are also available. These do not constitute insurance but provide participants with access to discounted fees for dental work.

Vision care insurance

Vision care insurance provides coverage for routine eye care and is typically written to complement other medical benefits. Vision benefits are designed to encourage routine eye examinations and ensure that appropriate treatment is provided.

Critical illness insurance

Specified disease provides benefits for one or more specifically identified conditions. Benefits can be used to fill gaps in a primary medical plan, such as co-payments and deductibles, or to assist with additional expenses such as transportation and child care costs.

Accidental death and dismemberment insurance

AD&D insurance is offered by group insurers and provides benefits in the event of accidental death. It also provides benefits for certain specified types of bodily injuries (e.g., loss of a limb or loss of sight) when they are the direct result of an accident.

CONCLUSION

Health insurance helps pay for medical expenses, whether through privately purchased insurance, it has many essential benefits attached to each type, and the health insurance agents and companies are always ready to meet the insurance needs of its members.