Health insurance is coverage that provides for the payments of benefits as a result of injury or sickness. It includes insurance for losses from medical expense, accidents, disability or accidental death. Insurance providers can include an insurance company or a government. An insurer estimates the overall risk of health care expenses among an individual or a target group and can develop a routine finance structure, for instance a monthly premium or payroll tax. This ensures that money is available to pay for health care benefits which have been specified in the insurance agreement.¹
The health care benefits are administered by a central organization such as a private business, government agency or not-for-profit clinic. A health insurance policy is typically a contract between an insurance provider and an individual (or their sponsor, such as an employer). The contract may be lifelong, such as private insurance, or renewable (monthly, annually etc…), or it might be mandatory for all citizens of a nation, depending on that nation’s laws. The contract specifies the type and amount of health care costs that will be covered.
In Canada, each province administers its own health insurance program, which has been partially funded by the federal government. The Canada Health Act stipulates that all Canadian residents have free access to medically necessary services, such as care delivered by nurses and physicians in hospitals and long-term care facilities.
1. Agency for health care research and quality (AHRQ). (August 2007). "Questions and Answers About Health Insurance: A Consumer Guide."