People often get confused between Medicaid and Medicare and the relationship between both of them, and the relationship between the both of them and the need for, and the paying of health insurance.
Medicaid and Medicare are two completely different and separate programs, the only real similarity in effect being between the two names.
Medicaid is a US government funded, but state administered insurance program for people who are deemed to be either in poverty, on low incomes or in some other way disadvantaged.
The criteria to be eligible for Medicaid can vary quite considerably from state to state, and each state administers Medicaid in its own right, often under a different name, which can make it even more confusing.
The question of how Medicaid affects health insurance is one that is going to become more pressing as at the nature of the current health insurance reforms becomes more evident by state to state.
Anyone buying health insurance for the first time needs to understand some of the basic premises that underlie each health insurance policy. A health insurance policy is a commercial contract whereby the individual known as the policyholder, or a business on behalf of individual policyholders, pays a sum of money to an insurance company.
Insurance Premiums
This sum of money is known as an insurance premium. In return, the insurance company will agree to provide a level of financial cover, known as an indemnity, for a range of benefits subject to the terms and conditions of the contract.
The insurance contract is known as the insurance policy. All insurance policies effectively work on this basis, but health insurance has a number of differences that are important to realise.
Most insurance policies, whether they be for auto or homeowners insurance tend to be on a ‘hope it will never happen to me basis’. Most people taking out health insurance are aware that actually they will probably need to claim on it at some point at some time in their life.
For this reason, health insurance policies are much more specific in terms of their nature of benefits, and the range of benefits available. A health insurance policy will specify in enormous detail exactly what is covered and exactly what is not covered.
There are likely to be numerous exclusions to the policy, and a wide range of health insurance terms which can mean different things under different conditions, and are likely to be expressly clarified in the policy document itself.
That will normally be a distinction made between hospital care, and primary care as well as that of outpatient procedures whether they are carried out in a hospital or clinical setting or in a primary care setting such as a doctor’s surgery.
