Chapter 24. Health Insurance

Health insurance enables people to budget in advance for health care and is important for nearly everyone. A health insurance policy is a business agreement formalized by a written contract that details both benefits and obligations. Basic health insurance includes benefits for hospital, surgical, and medical expenses. The extent of these benefits differs from contract to contract. Major medical contracts take over where basic insurance plans leave off. Managed-care policies combine insurance with health-delivery systems.

Group policies generally offer more coverage and cost less than individual policies. Most people are insured through a group policy obtained through their place of employment. Because the extent and type of covered services vary widely from contract to contract, policies should be read carefully to understand what protection they provide.

Managed-care plans tend to have lower premiums and result in fewer out-of pocket costs. Traditional indemnity policies tend to cost more and involve more paperwork (in filing claims) but provide greater choice of providers. To get the full benefit of their health plan, consumers should understand the extent of their coverage and any procedures (such as preauthorization) required when seeking care.