Understanding Your Health Insurance Policy

Did you know that few Americans have adequate health insurance coverage? This may be partially due to the fact that most Americans do not understand the pages and pages of information included in a health insurance policy. Because of this and the seemingly high-premium costs of health care, many Americans forgo proper coverage, when simply understanding health insurance could change everything. Let's discuss a few ways in which you can better understand your coverage, so that you can make any necessary changes.

Know the Terms—It's said time and time again with insurance policies: you need to know what the terms and phrases in your policy mean. These terms can refer to exclusions or provisions that could help or hurt you, and unless you know what they mean, you may never know about them. Most insurance companies and agents will only briefly cover your actual policy, leaving you to sort out the rest. And since health insurance policies can be novel-length, the appendix of terms at the back can be a chore to navigate.

Know the Difference: Medical Benefit versus Medical Necessity—Many people do not understand the difference between medical benefits and medical necessities, and they lean on the idea that the two share a common definition. This is not the case on any health insurance policy.

Medical Benefit—A medical benefit is something that your insurance company has agreed to cover. These may also be referred to as "covered services" in some policies. Most insurance companies cover only certain types of tests, drugs, doctors and treatments. Anything not listed in your policy under this section will not be covered and you will have to pay the total cost. In some cases, even covered services have to be approved by your insurance company ahead of time in order to be fully covered.

Medical Necessity—A medical necessity is something that your doctor determines to be necessary. Although your doctor will most likely attempt to stick to your covered services, it may occasionally be necessary for him to recommend non-covered services.

Review Your Policy Often—It is important to review your policy every year on its expiration, especially since many insurance companies change the provisions of their plans on a yearly basis, and can do so without notifying you in advance, although they are required to notify you. Most often, prescription services change the most, so keep careful track of your prescription provisions if you cannot afford for them to change.

Ask Questions—As with any monetary or life investment, you should ask questions when you don't understand something. Fortunately, most insurance companies furnish policyholders with a handbook on policies and procedures. Unfortunately, the handbook can be as vexing as the policy. Most health insurance companies have 24-hour 1800 numbers, and if not, they are still available Monday thru Friday 8am-5pm.

Remember, understanding your health insurance policy is the first step in making sure that you and your dependents are receiving proper coverage and care.