Medical Insurance

Medical insurance, also called health insurance, is an insurance policy that will help pay for medical expenses in the event of illness. In order to have this type of insurance, you take out a policy and pay the premiums annually for a specific length of time, such as for a number of years or until you reach a certain age. Some insurance policies can be for life. The policy stipulates what illnesses are covered and how much payment will be made.

Individuals can take out their own medical insurance policies and most companies have such programs for their employees. All insurance plans have the same basic components:

Premium – this is the amount a policyholder pays to the insurance company each year. You can pay the full amount when the policy comes due, or you can spread the amount over the year by making monthly payments.
Deductible - this is the amount you will have to pay for the medical expenses before the insurance will start paying. For example, the insurance may not pay any of the costs until you have paid a certain amount, such as $500. Then once this limit has been reached the insurance will start paying for the remainder of the costs.
Copayment – in the case of doctor’s visits or for prescription drugs, you usually have to pay 20% or 30% and the insurance pays the rest. Depending on the terms of the insurance, the doctor or pharmacy may bill the company or you may have to pay the full cost and send the receipts to the insurance company for reimbursement.
Exclusions – these are illnesses that are not covered in the policy.
Coverage limits – sometimes a policy will only cover expenses up to a certain amount. After that you are responsible for paying the costs.

The cost of medical insurance depends on your job as well. If you are working in an industry deemed to be high-risk, then you will have to pay a higher premium than someone who is in a job where there is little risk of being injured on the job. You can also get medical insurance to cover you when you travel out of the country or for specific illnesses, such as cancer, in which the medical costs are high. Long-term care is one option that most people do have included in their insurance to cover the costs of being in a nursing home.