Health Insurance – Basics (101)
The cost of healthcare is constantly increasing in Pakistan similar to the cost of every day needs. In the current economic downturn, obtaining quality healthcare is becoming unaffordable and getting out of reach for most Pakistanis.
One of the main reasons of low health status of the residents of developing countries especially Pakistan is not having access to quality healthcare. Therefore, it is very important for everyone to have alternate payment source to bear the healthcare cost, when required.
Health Insurance can help sustaining the cost of health services to people who may not able to afford it normally.
In principle, Health insurance is the way to pay for medical expenses when it is required. It’s a type of risk-management plan that provides financial support to bear medical, surgical and diagnostic expenses of insured individual, family or population based on agreed terms.
Health insurance is not life insurance.
Health insurance benefits are paid to stay healthy whereas life insurance benefits are paid subject to death of the insured.
Just like other insurance, the insured (individual or group) choose a plan according to his/her needs and agree to pay a certain amount periodically, and in return the insurer (the Company, Government) agrees to pay all or some portion of covered medical costs. Everyone may not require all kinds of health services at the same time so before choosing any insurance plan, make sure to assess all your needs and your priorities.
How does health insurance work?
Basically, it is a method of pooling money from people who are exposed to some health risks. The people who participate in the scheme contribute by paying periodic premiums. Premium so collected is used to pay out the expenses claimed by the people who have contributed to the scheme according to healthcare plan.
Different Types of Health Insurance Plans
There are different types of health insurance plan and they vary according to the individual’s needs. Different insurance companies’ offer different health insurance plans, which cover various diseases and medical services. Some plans include dental, vision, maternity and preventive care coverage while other plans only covers for major illness or limited services.
The health insurance usually provides coverage for the visits to the doctor, emergency rooms, hospital stays and medicines. The insurance may also covers the costs of preventive care (e.g. vaccination), which is necessary to stay healthy.
What is Premium?
Premiums are regular payments that are paid by the insured to insurer on buying a health insurance plan. A premium is calculated based on the associated health risk to the person (e.g. age, location, medical history, family history tobacco use) and the extent of healthcare services (hospitalization, medicines, emergency etc.) that will be covered in the insurance plan. A premium is paid as per the agreed payment interval such as monthly, bi-annually or annual payments.
What is Deductible?
Deductible is usually the amount that insured person pays before the insurance plan starts paying the expenses. For example a deductible of Rs. 5000 means that the insured person has to pay Rs. 5000 when seeking for a surgical procedure for a medical condition and then the insurance company will begin to pay the cost of health services as per the agreed terms in the individual’s plan.
What is Co-Payment?
Copayments are usually a fixed amount for various covered medical services. For example, a plan may require payment of Rs. 300 each time as a copayment against doctor’s consultation fees.
What is Co-insurance?
This is the amount of the costs of covered medical expenses, which has to be shared between the insured and the insurer, after a deductible has been paid. It is usually specified by a percentage. For example, the insured person pays 20% of a covered medical expense while the insurance company or insurer will pay 80% of the total expenses.
COMMON ILLNESSES THAT REQUIRE MAJOR FINANCIAL EXPENSE
Disease or conditions that require substantial financial expense includes
– Heart disease
– Maternity related complications
– Infectious disease
– Liver disease
– Kidney failure
– A major organ transplant
People who are unfortunately suffering with these diseases or risk of having should consider taking health insurance
WHY HEALTH INSURANCE IS IMPORTANT?
Health insurance enables a person or group of persons to manage spending on quality health care services according to their income level and avail maximum healthcare services with less payments. Health Insurance can help sustaining the cost of health services to people who may not able to afford it normally.