Health insurance is basically a contract between you and an insurance company. The essence of it is, if you pay a certain amount to them per month they will pay your medical bills in the event that you have to see a doctor, have surgery, or have a course of prescription drugs.

What Kinds of Health Insurance are there?

There are basically two broad categories of health insurance: basic and major medical plans. Basic plans usually include hospital stays, surgeries, and emergency treatment. These types of plans usually pay one hundred percent of the costs incurred; however their payment limit can be as low as $10,000 and often max out at $100,000 leaving the individual to cover all other costs.

Major health insurance usually includes hospital stays, surgeries, emergency treatment, prescription medications, x-ray and laboratory services, preventive care (for example yearly physicals), ambulance expenses, dental and mental heath care. Major health plans will often pay deductibles (i.e. cover the entire medical bill) up to $100 to $500 per year, depending on the plan, and then require the customer to pay twenty percent of their medical bills while the company covers eighty percent. Major health plans payment limits can reach $500,000 or $1,000,000 or even more.

So, while your basic plan may seem more cost effective, in the long run you’d be better off with a major health plan.

Pre-existing conditions clauses

Be sure to be aware of any pre-existing conditions clauses for non-payment when signing up for health insurance as these plans can include conditions that came into play up to six months before you got insurance but weren’t treated for. For example if you were in a car accident and had a herniated disc in your back and weren’t treated for it, but then you got health insurance and went to a doctor, technically if there is a pre-existing condition clause your health insurance doesn’t have to pay for any of your medical bills that have to do with your herniated back.

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