Health Insurance Policy
A health insurance policy is a legal agreement between the insurer and insured.
Insurer: The Company or seller or any entity that provides healthcare coverage. Commonly known as insurance company.
Insured: Buyer or person or group who buys the policy to get healthcare coverage. Commonly known as patient.
This contract defines coverage details (what services are included or excluded, & policy duration), payment obligations, rights and responsibilities for both the insurer and insured. Health insurance Policy also called Health Insurance plan.
Key Players in Health Insurance Policy
Policy Holder / Insured:
- The individual or group who buys the insurance plan.
- Also called the subscriber or policyholder or patient.
- The buyer of the policy is said to be Medically Covered or Eligible for Reimbursement of Medical Treatment cost by insurance company.
Insurer / Insurance Company:
- The company or organization selling the health insurance plan.
- The seller of the policy is responsible for covering part or all of the healthcare costs, as outlined in the insurance agreement.
Policy Types and Coverage Scope
A policy may cover a single individual or multiple people, depending on the specific plan or contract. For example, a father's policy may include coverage for his entire family, or each family member may have their own separate policy. Below are some structural examples:
- Individual Health Insurance:
Provides coverage for a single person, purchased directly from an insurance company or through an exchange.
- Family Floater Plans:
Cover multiple family members under a single policy, with a shared sum insured.
- Group Health Insurance:
Offered by employers to their employees, often with lower premiums compared to individual plans.
Dependent:
Dependent is the eligible individual or family member covered under a primary policy holder's health insurance plan. Dependents typically include spouses, children, or other qualifying relatives as defined by the insurance company. They generally receive the same or similar benefits as the primary policyholder or subscriber, but have to follow the terms and conditions specified as per policy agreement.
Who can be dependent:
Health insurance plans often allow dependents to be added to the policy, including a spouse or domestic partner, as permitted by the insurer. Children—whether biological, adopted, stepchildren, foster children, legal wards, or in some cases, grandchildren—can also qualify as dependents. Most plans have age limits, typically ending coverage at age 26, unless otherwise specified. However, some plans allow adult children with disabilities to remain covered beyond this age if they are unable to support themselves. Additionally, in certain states like California, parents may be added as dependents under specific conditions set by state law and the insurance provider. However, addition of dependent may cause increment of premiums cost monthly to policy.
Premiums:
Premiums are the fixed amounts that the subscriber or policyholder must pay monthly (or annually, depending on the agreement) to the insurance company to maintain their health coverage. In other words, premiums are the cost or price of the insurance policy.
Health Insurance Buying decision?
There are many healthcare policies available, that are operated under the same business model defined by federal and state rules and regulations but have different coverage levels, flexibility, and cost-sharing. In the U.S., policyholders typically choose a health insurance plan based on their individual healthcare needs (chronical condition, normal health maintenance), facility (network providers and their specialists), and their ability to handle cost-sharing, like premiums, Patient Responsibility (PR). We will discuss PR in more detail in the next chapter.
Insurance plans are divided into four main categories: Bronze, Silver, Gold and Platinum. We will discuss in later chapters.
Insurance Card:
When individual successfully brought healthcare policy then insurance company issued insurance card. An insurance card is an official document provided by your health insurance company that serves as proof of coverage. You’ll need it when receiving medical care or contacting your insurance provider. It contains important information about your health plan and coverage details.
Key Information found on Insurance Card:
- Member Names
The name of the person covered by the insurance policy, which includes the subscriber (policyholder) and any eligible dependents listed under the plan.
- Member ID Number
A unique identifier assigned to the insured individual. This number is used to verify benefits, check eligibility, and process claims.
- Group Number
Identifies the specific employer or group health plan associated with the policy, usually used for employer-sponsored insurance.
- Plan Number or Plan Type
Shows the type of health plan and coverage, such as: HMO, PPO, EPO (We will discuss this in detail in upcoming lessons.
- Insurance Company Name and Contact Information
The name of the insurance provider, along with phone numbers for customer service, claims, or 24/7 nurse advice lines.
- Patient Responsibility (PR) Details
Details about the cost-sharing amounts, patient may be responsible for paying
- Pharmacy Benefits Information (if included)
In some cases, your card may also include details for prescription drug coverage, like RxGroup, RxPCN, and RxBIN numbers. These are used by pharmacies to process your prescriptions accurately.
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