What is health insurance and how does it work?
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What is Health Insurance and How Does it Work?

As we pursue our careers and aspirations, we need to prioritize our health. Aside from the fact that poor health might prevent us from achieving our objectives, medical illness, cost, and treatment can be expensive and drain our savings. Sometimes, depending on the severity of a medical condition, one may be forced to take loans to meet their medical needs. 

Health insurance offers an impressive strategy to protect yourself and your finances. Health insurance policies protect you from the mental and financial strain that occurs with a medical emergency. What then is health insurance, and how does it work?

What is health insurance?

Health insurance is an insurance policy that covers a given percentage of the expenses that may arise from treating and managing illnesses, diseases, and infections. It also covers medical consultation fees, medical checkups, vaccination, among other medical needs.

How does health insurance work?

Like other insurance policies, health insurance requires that you pay a premium monthly or annually to the insurance service provider. Usually, the insurance company has a network of designated healthcare providers you can consult to enjoy health coverage. Patients who, for a reason, cannot consult with the designated healthcare providers may have to pay a higher percentage. It is important to note that some insurance companies are strict about consultation with other service providers and may outrightly refuse to pay for the services. On that note, it is essential to consult with your insurance policy service provider on their policies on consultation with external health care providers,

Health Maintenance organizations (HMOs) and certain insurance providers may require you to select a primary health care provider who oversees your medical care and treatment. This means that although there is a network of health care service providers, you would have to select just one to navigate your health needs. 

It is, therefore, important to note that, like most insurance policies, you cannot receive a refund at the end of the year if you do not use the services provided. However, you do not have to fall sick to enjoy the benefits of health insurance. You can enjoy medical check-ups, vaccination among other health services that would prevent you from falling ill.

Types of health insurance

There are different types of health insurance, but they fall broadly into two categories - private and public health insurance.

  • Private health insurance

Private health insurance is run and provided by privately-owned insurance companies. They usually work hand in hand with private hospitals and health centres and have a wide range of services available.

  • Government-owned or public health insurance

Government-owned insurance is run and operated by the government, such as the National Health Insurance Scheme(NHIS) in Nigeria and Ghana. The government subsidizes the health care services for a premium which is paid monthly. Government-owned health insurance is usually available in federal and state health centres, including a few selected private health centres. 

Benefits of health insurance

  1. It eases financial and mental strain.
    Health insurance provides you the assurance that the insurer would take care of the cost of treatments and drugs in a medical emergency. This way, your savings, and investments are protected as your finances wouldn’t be destabilized because of the expenses of medical costs. 
  2. Security for your loved ones and dependents
    Health insurance comes in handy for those who have dependents because the health insurance often covers them. This means that in a case of a medical emergency in which you aren’t available, your spouse or dependents can enjoy your health insurance coverage.
  3. It covers high medical costs.
    Medical costs are pretty expensive, especially when it involves critical illnesses such as cancer, accidents, etc. In such a situation, insurance coverage comes handy. Private insurance would mostly cover all the expenses, and government insurance would require you only pay a stipend or percentage to enjoy the services of health care.

What to consider when selecting a health insurance coverage

You need to consider a few details when selecting an insurance service provider, either private or public. This would ensure that you derive the best benefits from your insurance policy.

  • Policies
    Insurance company providers have varying policies. You need to note how much is charged for premium and what your health insurance covers. Your medical needs would help you select the insurance company you need. You should select an insurance company that provides sufficient health coverage. 
  • Claim process
    Insurance policies have different ways to claim your health coverage, which could be either reimbursement or cashless. For a cashless claim, you would have to patronize the insurers’ network of health providers. However, a reimbursement plan allows you more flexibility. You can use a service provider of your choice and receive a reimbursement from the insurance company after a couple of days. Depending on your preference, you should select a service provider that allows you this option.
  • Renewal and policy relapse 
    You should select an insurance company that allows you flexibility in terms of your payment schedule. Some insurance companies allow you to either pay monthly or yearly. However, in a situation that you fail to renew, your insurance policy would lapse or expire. Some insurance companies may give you the grace of a few months to make up payments or cut you off from their service. You should clarify their policies on renewal and policy relapse before selecting health insurance coverage. 

Conclusion

Health insurance is an impressive strategy to protect your health and finances. Although some may argue that they may never need the services, it is a risk management strategy that protects you from the eventuality that you fall sick. When selecting a health insurance company, you should compare health coverage policies in selecting one that is effective for you. It is often said that health is wealth and without health, wealth is nothing. With insurance, you can protect what is really important - you.

Disclaimer: This article is meant to provide general guidance and understanding of cryptocurrency and the Blockchain network. It’s not an exhaustive list and should not be taken as financial advice. Yellow Card Academy is not responsible for your investment decisions.

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