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Health Insurance Basics...

The terms health and accident insurance, accident and sickness insurance, and health insurance, are used when people are talking about health insurance. Health insurance is a critically important type of insurance. Obviously, you need health insurance to provide protection against the high costs of illness and injury.

Basic Forms of Health Insurance

There are basically three categories of health insurance in this country. There is medical expense insurance, disability income insurance, and accidental death and dismemberment (AD&D) insurance. Let's learn the basics for each of these:

Medical expense insurance provides financial protection against costs associated with medical care. Some time a medical expense plan will reimburse the insured in full, sometimes only partially. Medical expense insurance typically indemnifies the insured for expenses related to hospital care, surgical expenses, physician expenses, outpatient care, and medical treatment programs. Medicare supplement insurance and Long-Term Care insurance plans are designed for the elderly. Read more about Long Term Care insurance by visiting our Long Term Care Insurance Learning Center posted on insurancegenie.com's website.

Disability income insurance is designed to provide a substitute income for a person when that person becomes injured or disabled and is not able to work. In some cases, if the disability is considered permanent, the person can receive disability benefits for the rest of his or her life. If the disability is classified as temporary, the person's benefits usually cease at or around the time that the person is able to resume his or her normal work duties.

Accidental Death and Dismemberment Insurance is typically found in group, or employer-sponsored health insurance plans. It provides for the payment of a lump sum benefit in the event of accidental death or dismemberment to the insured. You will often hear people refer to the terms capital sum and principal sum when discussing the lump sum benefit paid out under these kinds of health insurance policies.

Plan Types: There are essentially two kinds of heath insurance -- Fee-for-Service and Managed Care. Although these plans differ, they both cover an array of medical, surgical and hospital expenses. Most cover prescription drugs and some also offer dental coverage. Fee-for-Service plans generally assume that the medical professional will be paid a fee for each service provided to the patient. Patients are seen by a doctor of their choice and the claim is filed by either the medical provider or the patient.

More than one-half of all Americans have a type of Managed-Care plan. Various plans work differently and include: health maintenance organizations (HM0s), preferred provider organizations (PPOs) and point-of-service (POS) plans. These plans provide comprehensive health services to their members and offer financial incentives to patients who use the providers in the plan. Also, it's always important to note that the quality of medical care you might receive from an HMO could not be up to the level of care you might receive by participating in a different plan, so make sure to investigate some of the medical providers who participate in the HMO plan you're thinking of selecting.

If You Just Changed Jobs...

If you switch employers, you have the right to carry your group health insurance coverage with you to a new job for up to 18 months under the terms of COBRA (COBRA has a lot of different provisions, and your dependents might be eligible to continue their coverage as well, depending upon a variety of factors). You must pay the full premium, but at group rates that are far cheaper than the individual rates you would pay for similar coverage.

Health insurance under COBRA is available in the following situations:

1.   You leave a company and become unemployed for up to 18 months.
2.   You are a widow or child of an individual who dies while working for the same company for three years or more.
3.   You are the divorced spouse or a child of an individual who has left a position at a company that he or she held for at least three years.
4.   You are a child under age 23 and have a mother or father that left a job.

Information about disability provisions...

Employer-paid disability insurance - This is compulsory thanks to most state laws. Most employers provide some kind of disability income insurance to their employees. Many larger employers provide long-term disability coverage as well, and in some cases rehabilitation services.

Social Security disability benefits - This can be paid to workers whose disability is expected to last at least 12 months. These individuals are often refer to as 'permanently disabled', meaning there is little chance of returning to work.

Disability income provisions in individual policies - You can buy your own disability income policy. The primary difference between employer-sponsored disability income policies and individual disability policies is that with an individual policy, if you're paying your own premiums, the benefits are tax-free, whereas with a group policy, the employer is usually paying the premiums, so the benefits are not deductible.

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