Understanding Health Insurance

By: Lee Ann Obringer & Melissa Jeffries

Personalizing Your Policy

With catastrophic insurance, you save money if you're healthy. But if something drastic happens, you're covered.
With catastrophic insurance, you save money if you're healthy.But if something drastic happens, you're covered.

In addition to the two major categories of plans, you could also opt for supplemental insurance. These types of insurance plans are designed to pay benefits in addition to your regular insurance plan. They're usually very specialized and while they may duplicate some of what your normal insurance policy covers, they shouldn't be used in place of a comprehensive plan like an HMO or PPO. Different types of supplemental insurance include:

  • Hospital-surgical, or Hospitalization Insurance: These policies have separate limits for hospital charges and physician charges associated with a hospital stay. Benefits usually include the hospital room and other hospital services, surgery, physicians' non-surgical services performed in the hospital, and diagnostic X-ray and lab expenses. They may also cover room and board in an extended care facility. Most don't require a deductible to be met before they'll pay for a covered medical expense, but they are limited in the amount they'll cover and shouldn't be used in place of a more comprehensive plan.
  • Catastrophic, or High Deductible Health Insurance: Catastrophic health insurance usually has high deductibles and low monthly premiums. Most cover expenses for hospital stays, surgery, intensive care, diagnostic X-ray and lab tests. If you don't have other coverage, this type of coverage may prevent you from having to file bankruptcy in the event of a major medical problem. This type of insurance also has the benefit of qualifying users for a Health Savings Account, or HSA. An HSA is a savings account in which tax-deferred deposits can be made that will then be used for qualified medical expenses. Unlike flexible spending accounts the money deposited in these accounts will not be lost if it's not used during that year.
  • Long-term Care Insurance: These policies cover medical care, nursing care and certain types of in-home care should you become ill or disabled to the point where you can't care for yourself.
  • Specified-dread Disease Insurance: These policies only cover treatment for a specific disease, such as cancer, stroke or heart attack. They're purchased before a diagnosis is made and won't be issued if a person already has the disease specified in the policy. These policies may be riddled with limitations including only paying for hospitalization for the specified disease and not the out-patient procedures needed, such as chemotherapy. Other limitations include a fixed amount of money they'll pay toward the specified disease, waiting periods and fixed time-frames that the coverage for the specified disease will run out.