The term health insurance is generally used to describe a form of insurance that pays for medical expenses relating to any illness or accidents. Health insurance is sometimes also used to include insurance covering disability or long-term nursing or custodial care needs.
Health insurance can be offered through a government-sponsored social insurance program, or by private insurance companies. Health insurance may be purchased on a group basis, by a firm to cover its employees or by the individual consumers.
In each case, the covered groups or individuals pay receive premiums or taxes to help protect themselves from high or unexpected health-care expenses. Various benefits can also be provided through social welfare programs funded by the government of the concerned company. Health insurance works by estimating the overall risk of healthcare expenses and developing a routine finance structure.
With regard to the history of insurance, the concept of health insurance was first proposed in 1694 by Hugh the Elder Chamberlen from Peter Chamberlen family. Before the development of health insurance, patients were expected to pay all other health care costs out of their own pockets. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures.
Health insurance policy is a contract between an insurance company and an individual, which is renewable annually or monthly. This type of insurance includes payment of premiums, copayment, coinsurance and coverage limits. With regard to coverage limits, some health plans only pay for health care up to a certain dollar amount. Some plans have annual or lifetime coverage maximums.