Private Medical Insurance

Private medical insurance has different connotations depending on what country you live in. For example, in the UK, where a National Health System (NHS) exists, private medical insurance is only used by about 8 percent of the population. It’s often purchased to supplement the NHS.

However, in America the vast majority of health insurance is private medical or for profit insurance.

Following are the two major private medical insurance plans:

Group Plans- These are health plans that groups of people purchase. An individual cannot be excluded in a group plan. The most common forms of these are seen in company health plans.

The monthly premium for consumers tends to be less than individual plans because the employer usually subsidizes a portion of the cost.

Individual Medical Plans- This medical insurance is purchased outside of a group—usually through an insurance agent or an insurance company that specializes in health insurance.

They include insurance for the following:

• Self employed
• Unemployed
• People who need gap or short term insurance

Common Characteristics of Private Medical Insurance Plans

Whether you’re on a group or an individual policy you’ll see commonalities throughout the coverage:

Deductibles- Most health insurance policies have deductibles. Deductibles are used to lower your premium cost and pass some of the medical charges on to you.

For example, if your policy (or medical service) comes with a $500 deductible, you’ll have to pay that first before the insurance will begin paying. So, if your doctor’s visit costs $250 and you have a $500 deductible, you’ll pay the whole $250—not your insurance company.

Copayments- With HMO’s especially, you’ll see copayments. For example, if you visit your doctor, you might have to pay a $25 copayment when you get there. The insurance company will pay the remainder of the visit charge.

Coinsurance- This is a payment percentage you’ll share with your insurance company. It kicks in after the deductible is satisfied.

For example, after the deductible, the policy may stipulate that the insurance company will pay 80% of the next $10,000 worth of charges. This means that you’ll pay 20% or $2,000 of the next $10,000 in medical bills.

Limits- Most policies will have two limits. One per incident and one for a lifetime payout. So, the policy might carry a $100,000 limit for each injury or illness with a limit of $5,000,000 over a lifetime.

Policy Inclusions- Private medical insurance policies will spell out what is covered. For example, most policies cover semi-private hospital stays, surgical treatment, lab and blood work, intensive care, inpatient psychiatric treatment, doctor’s visits, etc.

This will include the stipulation for what, if any or when, if ever, any preexisting conditions will be covered.

Policy Exclusions- Accordingly, excluded situations will also be spelled out. For example, some policies will not cover cosmetic surgery, well care, outpatient mental health treatment, vision or dental work and much more.

Short term policies will not cover pregnancies or any type of infant or mother well care.

Private medical insurance treatments terms and exclusions can vary widely among insurers, so comparison shop with due diligence.

Steve Wyrostek -MedicalInsurance.org Expert A 20 year plus veteran of the insurance industry, Steve managed departments in the personal and commercial lines areas of major insurers. He’s familiar with how insurance—ranging from boat to workers compensation—works.