What is a health insurance policy?

A health insurance policy is a binding contract issued by an insurance company to an individual or group which promises to pay for health care reasonably required by the “insured” or “policy holder” or “certificate holder” to treat illness or injury. If the insurance policy is issued to an individual, the individual applies for the policy and pays the premiums either directly or through payroll deduction. Typically, in individual health insurance the individual policyholder is insured and also, in exchange for a higher premium, the insurance covers a spouse and dependent family members.

In the circumstance where the health insurance is obtained by an employer or a group or an association, the entity is the “group policyholder” and the covered individuals receive “certificates” of insurance. Generally, in addition to payment of premiums by the policyholder, the insured is also responsible for payment of deductibles and co-pays (a percentage of actual charges or a fixed amount per visit) which are predetermined in the policy at set amounts or rates.

Case Studies: Illustrating Health Insurance Policies

Case Study 1: John’s Unexpected Hospitalization

John, a self-employed individual, had recently purchased an individual health insurance policy to ensure coverage for unforeseen medical expenses.

One day, he suffered a severe injury and required immediate hospitalization. Thanks to his health insurance policy, John’s medical expenses were covered, including the cost of surgery, hospital stay, and follow-up treatments.

Case Study 2: Sarah’s Family Coverage

Sarah, an employee at a large corporation, had obtained health insurance coverage through her employer’s group policy. Her policy not only provided coverage for herself but also extended to her spouse and dependent children.

When Sarah’s husband fell ill and required specialized treatment, their health insurance policy played a crucial role in covering the significant medical expenses, ensuring he received the necessary care without financial burden.

Case Study 3: Robert’s Deductible and Co-pays

Robert, a member of an association, had enrolled in a health insurance policy provided by the association’s group policyholder. While his insurance covered a wide range of medical services, Robert was responsible for paying a deductible and co-pays.

When he underwent a series of diagnostic tests and consultations for a chronic condition, he paid the predetermined deductible amount and a small co-pay for each visit, while the insurance covered the rest of the expenses.