Define Medical Insurance

The cost of medicine has always been very high. Whether it be the medicine itself, visits to the doctor’s office or surgery; the cost is too high for the normal person to pay out of pocket. This is where medical insurance comes into play. It will help you pay those costly medical bills so you do not have to worry about it when you get sick. Medical insurance helps you stay healthier and live a good life. Almost everyone today lives with medical insurance, it is essential. Living without it can be an extremely dangerous task.

Medical insurance will cover your medical costs after your deductible. A deductible is a certain amount of money that you must pay, out of pocket, to help cover the medical expense you have incurred. If your deductible is $1,000 and you had a medical expense of $5,000 then the insurance company would pay for $4,000 on your bill. The higher your deductible the lower your premium is going to be. A premium is a monthly rate and it is determined by what type of plan you have. There are two types of plans: indemnity and managed care plan. Indemnity allows you to see any doctor you want and the insurance company will cover your expenses past the deductible amount. HMOs have a certain list of doctors you are allowed to see, these doctors are prescreened and cover all aspects of the medical fields. PPOs are a combination of indemnity and HMOs. Indemnity has the highest premiums while HMOs have the lowest.

How It Works

When you get a medical plan you have to make some key decisions. What type to get, managed care or indemnity, and how to set up your policy. Your policy is going to have two main parts: the deductible and the premium. The premium is your monthly payment, the greater the risk you are to insure the higher your premium will be. Your deductible is how much of your medical bill you will pay when a bill arises. For example:

If your deductible is $500 and your medical bill from your surgery comes back at $3,000, you would pay your $500 and the insurance company would pay the rest, $2,500 in this case. If your medical bill came to less then $500 then you would pay the entire bill. You pay anything up to, but not beyond $500. The lower your deductible the more money you will save when it comes to medical bills.

The higher your deductible, the lower your premium and vice versa. It is somewhat of a gamble, if you feel you won’t have that many hospital trips them it is probably a good idea to get a large deductible.

Additional Resources:

• Michigan Health Coverage FAQs
• Health Insurance

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