A health insurance policy is a legal contract that must be issued by a licensed insurance agent. This contract requires the policy holder to pay monthly or yearly premiums in exchange for health care coverage. This coverage can extend to physician visits, hospital stays, surgery, treatments, tests, prescription drugs and a variety of other services and products. A health insurance policy consists of many aspects, so it is important to take the time to review it in its entirety with your insurance agent. There are several different types of health insurance policies available, and each one is suited to different needs. Health insurance policies may contain clauses pertaining to a deductible, co-insurance or copayment.

A health insurance policy can be obtained for an individual or family. It can also be purchased through an employer as part of a group policy. All of these policies may include deductibles, co-insurance and copayments. A deductible is a flat fee paid by the insured each time he or she seeks a medical treatment, procedure or service. This fee must be paid for before receiving any type of benefit from the policy. A deductible can be charged per service or on an annual basis. There are some services that do not require a deductible to be paid. This will vary from plan to plan, and there are usually separate deductible amounts for individuals and families.

Co-insurance is the percentage of a medical expense that the insured is responsible for paying. The insurance company will then pay the remainder of the cost. One of the most common percentage splits is for the insurance company to pay 80 percent and the insured to pay the remaining 20 percent of the service. Some plans will also pay the entire amount of a health expense, depending on what the service or treatment is.

A copayment is another stipulation present in many health insurance policies. A copayment is the amount paid by the insured each time he or she requires a medical treatment or service. It can actually be considered as a form of co-insurance. A copayment must be paid before any benefits will be paid for any medical expense. A copayment is a very small portion of medical expenses, but the purpose is really to prevent moral hazards. A moral hazard can occur if a person seeks medical treatments or services that are not necessary. Without a copayment clause present, it is believed that people will tend to seek more medical expenses than they need, causing the insurance company to pay out unnecessary fees.

Always inquire about this information when looking to purchase a health insurance policy. Your insurance agent will clear up any concerns that you may have.