Health Insurance
Insurance is the act of securing or insuring an object. The 'object' in this case can be physical or not. The act of securing is carried out by a registered insurance company that undertakes to pay for the cost of damage, repair or loss of the secured object in exchange for money, commonly referred to as premium. A part from the agreement that is signed between the insurance company (the insurer) and an individual or a group of individuals (the insured), there is a policy. The policy outlines in detail what the insurance company will be responsible to pay for (cover) and what it will not cover. The premium that the insured pays is not refundable and can be paid either monthly, quarterly or yearly, depending on the type if insurance taken by the insured and the company.
The idea of health insurance was proposed by American Hugh Chamberlen in 1694. By the end of 18th century, accident insurance became available. Franklin Health Assurance Company was founded in 1850 in America and started offering injury cover for injuries sustained in railroad accidents. By 1866, over sixty insurance companies had been registered in America and were offering accident insurance. The insurance industry grew very fast and the first disability insurance through an employer was secured in 1911, with an issuance of a policy.
Patients used to pay for medical costs out of their own pockets before the advent of health insurance, and this was having negative implications on the workforce and production. Modern health insurance policies were developed in the 20th century. The initial comprehensive insurance cover was very basic unlike today. Such cases as routine, preventive and prescription drugs were not covered. Full medical expenses policies came into effect at the start of 20th century, where some healthcare providers started offering their services on pre-pad terms.
Premium
A premium is the amount of money that the insured pays the insurance company for the service to be rendered. This can be monthly, yearly or as stipulated in the policy. A premium can be of various forms;
(a) Full premium. In this case, the insured pays the full amount in the agreed period stipulated in the policy. In the event of sickness or illness, the insurance company bears the full responsibility in settling costs involved. This is suitable for those who do not want out of pocket expenses from time to time.
(b) Deductible premium. If you opt for deductible premium, you will have to pay for an agreed amount per year before the specified cover takes effect. This means that you will have to pay out of pocket for a number of expenses before the insurance company comes in to foot the remainder part of the bill in a given year or as stipulated in the policy. This can help those who may not be in a position to pay full premium but would like to have some cover.
(c) Co-payment premium. In this case, you will have to pay out of your pocket a certain amount before the insurance company settles the rest. Unlike deductible premium, this applies each time you visit a health care provider.
(d) Coinsurance premium. This is similar to co-payment premium, except that in coinsurance, you pay a certain agreed percentage of the total cost of medical service received and the insurance company pays the other percentage.
(e) Capitation premium. This is the kind of premium that an insurance company pays a health care provider to provide medical services to it's or third party staff. This is popular with many employers.