Health insurance

The term health insurance is generally used to describe a form of insurance that pays for

medical expenses. It is sometimes used more broadly to include insurance covering disability

or long-term nursing or custodial care needs. It may be provided through a government-

sponsored social insurance program, or from private insurance companies. It may be purchased

on a group basis (e.g., by a firm to cover its employees) or purchased by individual

consumers. In each case, the covered groups or individuals pay premiums or taxes to help

protect themselves from high or unexpected healthcare expenses. Similar benefits paying for

medical expenses may also be provided through social welfare programs funded by the

government.



Health insurance works by estimating the overall risk of healthcare expenses and developing a routine finance structure (such as a monthly premium or annual tax) that will ensure that money is available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization, most often either a government agency or a private or not-for-profit entity operating a health plan.