Health insurance is a contractual agreement between you and your health insurance company.

You (or your employer) agree to pay a monthly premium in exchange for the insur-ance company providing coverage and payment of some of the expenses incurred for covered medical conditions. Like most contracts, there are restrictions and stipulations. The insurance company will not cover every medical expense, condition, or situation. It is important for you to know what is covered and what is not covered in your contract with your health insurance company.

There is a difference between health care coverage and health care.

The health insurance company provides health care coverage (payment for medical expenses covered by the contract). The physi-cian provides health care (treatment for medical conditions). With the exception of certain HMOs that employ physicians, health insurance companies do not provide health care. The insurance company, however, may have contracts with physicians that they will provide care for its customers for a specified reimbursement.

Not all health insurance Companies are alike.

Some are not-for-profit and return the money they earn, after expenses, into benefits and services for customers and reserves to pay future claims; some are for-profit plans with shareholders and stock values. Some have very large networks of physicians and some have smaller networks. Some have established standards for customer service; some do not. Some have been in business for decades and others are relatively new. It is a good idea to find out as much as you can about your insurance company and how it operates.

Not all health insurance Products are alike.

Members of a Preferred Provider Organization (PPO) may choose to go to a physician within the preferred provider network (and receive a discount on medical services) or go to a physician who is not in the network (and pay more to receive these same services). Some PPO plans require co-payments for in-network services. A co-payment is a $10, $20 or $30 set fee for a physician office visit or a prescription. PPO plans may also require the member to pay coinsurance. For example, the member may pay 20% of the medical costs of an in-network service and the health insurance company will pay 80%, or the member may pay 30% of the medical costs of an out-of-network service and the health insur-ance company will pay 70%. Coinsurance amounts vary. A health maintenance organization (HMO) also uses a contracted network of physicians. However; care is usually "managed" through a primary care physician (PCP). A referral from the PCP is required before a member can visit a specialist. HMOs generally charge co-payments (a set fee) and seldom charge coinsurance (a percentage of the costs). In an "open-access" HMO, the member is allowed to visit selected types of specialists without a referral.

The lowest premium is not always the cheapest coverage.

What is covered by your health insurance may be more important than what you pay for it. Ultimately, the best health insurance coverage for you will provide the benefits you want at a price you can afford.

The premium dollar you or your employer pay consists of several key components.

These components include, among others, medical costs, administrative costs, taxes and broker fees, and the reserve dollars required for the health insurance company to remain financially solvent. Laws intended to protect consumers require that health insurance companies hold a high level of "reserves" to pay out claims.

The premium dollar amount can fluctuate based on the costs of each premium component.

When medical costs increase due to more frequent use of medical services, escalating drug costs, or higher physician and hospital reimbursement, the premium amount may also increase. When administrative costs increase due to services or administrative procedures mandated by the state legislature, the premium amount may also increase. Many pressures affect the premium amount. Understanding the components of the premium and the impact of consumer behavior and legislation is very important in helping to control premium costs.

Most Arizonans are satisfied with their health insurance company.

In a study conducted by WestGroup Research, nearly nine of ten Arizonans were satisfied with the service provided by their health insurance company. Also, more than nine of ten Arizonans were satisfied with the care they received from their physician. While news coverage does not always reflect the positive, satisfaction with health care coverage and health care is as high or higher than most other kinds of service provided to consumers

Knowing up front how your health insurance company operates and what is covered or not covered in your health insurance coverage may help you in the long run.

Some people wait until they or their dependents are sick before they find out more about their health insurance company and their health care coverage. Knowing up front how your benefits work can help you feel more confident and more secure when you use them.