How Medical Insurance Works

Medical insurance is a vital asset for nearly every American. In 2019, the cost of healthcare for the average American was $11,582—that’s more than 20 percent of the average U.S. worker’s income. 

Fortunately, medical insurance can help to alleviate this expense. In California, 93 percent of adults carry some form of medical or health insurance. While more than one-third of these policies are provided by Medi-Cal, the remainder are held by private insurance companies.

How Does a Medical Insurance Policy Work?

When you purchase medical insurance, you’ll be asked to pay an annual or monthly premium to your insurer. The money you put into your policy, along with the money other customers put into theirs, goes into a reserve. 

This reserve is used to cover qualified medical expenses anytime you make a claim on your policy. Because most policyholders won’t access 100 percent of their coverage each calendar year, your insurer is able to cover your medical expenses while making money at the same time.

Network Providers and Copays

When you purchase a new medical insurance policy, your insurer will supply you with information about in-network service providers. In most cases, your medical care is only covered by your insurer if you seek care from these in-network providers. 

If your insurance company does cover out-of-network care, they may pay a smaller portion of the cost than they would if you’d received care from a provider in your network.

A copay is the amount you pay out-of-pocket for your medical expenses. Depending on your plan, this may be any amount over the allowable cost or it might be a percentage of the total cost of the service. 

This amount might vary for each service that’s covered under your policy. Of course, these rules vary depending on the policy so it’s important to clarify with your broker or agent exactly what’s covered and what portion of your medical costs you’ll be expected to pay.

What Does Medical Insurance Cover?

While every policy varies in the amount of coverage it provides, it’s safe to assume that most medical insurance plans will provide some amount of coverage against hospitalization expenses and specific illnesses. 

This includes hospitalization resulting from accidents and emergencies. Medical insurance does not cover preventative care or other healthcare services, simply the healthcare required from an automobile accident.

Medical Insurance Versus Health Insurance: What’s the Difference?

Whereas medical insurance provides coverage for emergencies and specific illnesses, health insurance is far more comprehensive. A typical health insurance policy provides coverage for preventative care and health check-ups as well as critical illnesses, post-hospitalization care and maternity care.

Finding the Right Medical Insurance

Whether you need medical insurance for yourself or your entire family, it’s important to find an agent that provides you with clear pricing, affordable quotes, and professional service. 

Make sure your agency, like Marisol’s Insurance Services, is licensed by the State of California and that they’re willing to take time to explain your options, including the cost and what’s covered.

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