Guide to Health Insurance

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Using a Health Insurance broker

Health Insurance is not as straightforward as some insurance products. The individual products on offer differ from each other and your needs will not be the same as other people’s. The broker is trained to take you through a process designed to establish which product would suit you best. Good brokers will know the products inside out and good broker firms will be able to offer you prices lower than if you went direct to the insurance provider.

This is why we work with Contact Insurance. They know the products, they often beat the providers’ prices and they maintain the right balance between being professional and being personable.

The best way get the right health insurance policy for you, your family or your business is to fill out the form and let Contact Insurance help – after all, it will not cost you anything and they will give you a great deal of assistance, experience and expertise.

About Health Insurance

Health insurance provides a fund for paying medical expenses in the event that the policyholder is ill or injured. It often incorporates disability or long-term nursing or custodial care needs.

In the UK there is health care provision available, free to all, through the National Health Service (NHS). The care it provides can be enhanced though health insurance. Standard procedures are often best provided through the national network of health care professionals and hospitals within the NHS, while more involved procedures such as surgery or specialist care can be difficult to secure in a timely fashion. Private Medical Insurance is used to access medical care faster and more selectively while securing greater comfort and priority in terms of private rooms, appointment times and specialists available nationally.

How are Health Insurance costs assessed?

The equations for assessing Health Insurance premiums are based around the overall risk of health care expenses being incurred. This will incorporate the chances of any individual needing health care through to the cost of that health care. Key factors for underwriters will therefore be national statistics for certain medical conditions from corns to cancer. The medical history, of an applicant and their current medical condition will additionally be factored in. An assessment is then made concerning the chances of that person contracting any of a range of conditions. That is measured against the cost of those conditions. All of this is absorbed into the equation along with profit and commissions and thus a premium is produced.

How Health Insurance works

A health insurance policy is, legally speaking, a contract (policy) between an insurance company and a person (the policy holder) or his sponsor (e.g. an employer). The contract can be renewed annually, monthly or it can be lifelong. The details of the contract, i.e. the type of insurance and the level of costs and cover are agreed in advance. These are provided in documentation and once the cover and the costs are agreed, subject to medical and other checks, the insurance on offer is defined in that contract or policy.

Health Insurance Jargon Buster

Premium:

The payments made by the policyholder (or e.g. his employer) to the insurer to secure health coverage. It is usually a monthly payment but can be quarterly or annual.

Excess:

Most policies require the policyholder to pay an initial amount of any claim before the insurer meets the rest of the cost. That amount is agreed in advance and the level of this excess will have an impact on the premium. In reality, this means that treatment involving e.g. a single prescription may not be worth making a claim against if it does not exceed the excess level. If the treatment is ongoing and permanent it could, at some stage exceed the excess and make a claim viable.

Co-payment

Certain services may attract a type of excess called a co-payment. For example if a policyholder makes frequent visits to a doctor, there may be a proportion of such costs that the patients will have to contribute themselves. These co-payments are applicable whenever a particular service is taken.

Coinsurance

Instead of, or in addition to, paying a fixed amount up front (a co-payment), the co-insurance is a percentage of the total cost that insured person might also pay. For example, the member might have to pay 20% of the cost of a surgery over and above a co-payment, while the insurance company pays the other 80%. If there is an upper limit on coinsurance, the policyholder could end up owing very little, or a great deal, depending on the actual costs of the services they obtain.

Exclusions:

As with most insurance policies, Health insurance policies will specify certain things that are not covered. Typically these could include pre-existing medical conditions, or perhaps previously held illnesses or injuries. There will also be some standard exclusions depending on the insurance provider, the level of cover and the type of policy. In such situations, the insured will be expected to meet the cost of services not covered under their health insurance.

Coverage limits:

Some health insurance policies will place a ceiling on the amount of cover available, either in total, or more usually against certain treatments. The Policyholder would then have to meet any further charges for such items. Some policies have annual or lifetime coverage maximums. In such cases, the health insurance will stop payment at that point and the policyholder must decide whether to take on the extra cost of further treatment.

Underwriting

The two most common types of underwriting adopted by medical insurance providers are Moratorium and Full Medical Underwriting (FMU).

Moratorium Underwriting

Moratorium policies cover the policyholder for pre-existing conditions following an initial two-year period from the start date of the scheme. Until that period is over, those conditions will not be covered. Most health insurers use this to reduce the risks of taking on a client with pre-existing conditions. The client would have to be clear of Symptoms, Advice and Treatment related to the pre-existing condition for at least two years. For conditions that could be ongoing, there are a few insurers that do not require the client to be clear of symptoms, treatment and advice for that two years, so after two years these insurers would automatically cover these conditions.

Fully Medically Underwritten

The other option is FMU or a Fully Medically Underwritten policy. This is where the insurer will require the client to complete some underwriting questions and possibly complete a health declaration. The insurer will assess the declaration and decide what conditions they are prepared to cover and what conditions they may exclude. Generally pre-existing conditions are not covered when going down this route, but it can be good for certain clients as it means they will know exactly what is and what is not covered from the start of the policy.

Out-of-pocket maximums:

This treats certain types of payments (e.g. prescription charges) as out of pocket expenses. Once the total out of pocket expenses have reach a set level (the maximum) the health insurance pays all further covered costs.

Capitation:

Insurance companies will often negotiate a rate with a single supplier of health care services in return for sending all their policy holders to that supplier. The amount paid to the supplier by the health insurance company is called ‘Capitation’.

Prior Authorisation:

Health Insurance providers often issue a certificate to authorise a medical service. It is a little like a purchase order from the insurer to the supplier and provides documentation t the supplier that the insurance company will pay for the service, clearing the way for the work to start.

Explanation of Benefits:

This is self-explanatory. It is a document laying out all that is covered and the levels of payments available through the policy. It is sent from the insurance company to the policyholder / patient.

Other factors affecting insurance prices

Insurance prices tend to be affected by a range of factors. Largely the advances in medical technology tend to force the pace. New and often expensive treatments, as well as diagnostic tests, mean that insurance companies are potentially liable for paying these increased costs in a future claim. This risk is reflected in the premium level and tends to drive the costs up. People live longer these days and elderly people require more medical care than younger people. The health of the general population is also a factor. There are greater levels of obesity and increased incidences of conditions such as diabetes, heart disease and stroke because of this.

NHS vs. Private Health Insurance

The NHS is a public service available to UK residents. It is funded via tax, costing around £104 Billion per year. The NHS provides the majority of health care in the UK and regardless of status of other insurances held, everyone in the UK qualifies for treatment by the NHS

Health Insurance Care is often wrongly considered to be a luxury layer on top o NHS care. It is true that Health Insurance policyholders are likely to get access to private rooms in private hospitals. However they are also likely to get appointments quickly and with a broader range of experts.

Critically, the NHS also has limits. There are certain drugs, which the NHS finds too expensive to provide and the only realistic option to cover certain cancer conditions and other critical illnesses, is via private health insurance

Health Insurance: Did you know?

Health Insurance is cheaper outside London.

Health insurance through Aviva is cheaper in Scotland and Northern island than it is in England if you exclusively use hospitals in those countries.

With an Aviva family health insurance scheme, all second children are included at no extra cost. This means that second, third, fourth, …ad infinitum, all are included for free.