If your health, well-being and pocketbook are three things that are important to you, you probably understand the significance of health coverage. "But I don't go to the doctor a lot," you say. While you may not make many trips to the doctor, you never know when a medical emergency that could cost you thousands of dollars will occur; this is where health insurance steps in.

To help you better understand your health insurance policy, let's define some terms you will need to be familiar with.

Copayment - You are required to pay this amount towards medical bills according to your health insurance policy. Your policy will list whether or not this is a dollar amount or a percentage.

Deductible - total amount you will pay before your health insurance company takes over your insurance payments.

Excess Major Medical policy - This type of policy has a very high limit as well as a high deductible and could provide up to $2 million of financial protection. Other possible highlights include nursing
home benefits or home health care.

Health maintenance organization (HMO) - HMOs encourage preventative care and strive to provide health care to its members at affordable prices. To do this, the HMO tries to stay away from deductibles or copayments. Most HMOs have their own private clinics and staff. Only visits to staff within the HMO network are covered by the policy.

Major medical - Severe or extreme health problems.

Major medical policy - This insurance policy covers most serious medical expenses up to a set maximum limit.

Managed care - Simply put, the purpose of managed care is to manage costs and make sure insurance premiums are affordable. Because cost efficiency is the main focus of managed care, medical decisions are made by the individual's insurance provider.

Out-of-pocket maximum - This figure is the greatest amount of covered medical and surgical expenses you might have to pay each year. It limits what you will pay at the end of the year between copayments and deductibles.

Preferred provider organization (PPO) - PPOs provide health care services at a reduced cost. PPOs are typically more flexible than HMOs and allow policy holders to visit out-of-network professionals.
While HMOs own their own clinics, PPOs do not.

Understanding these definitions will put you a few steps closer to deciphering your health insurance policy. If there are specific questions you have regarding your health coverage, always contact your insurance provider. They will be more than happy to discuss any questions you may have. Health insurance is a financial issue you
cannot neglect.

While you cannot predict medical emergencies, you can prevent financial misfortune in the event of medical emergencies by purchasing health insurance and understanding your benefits and limits.

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