What I need to know before I go shopping for a health insurance plan.
If you already have health insurance, it’s important to be prepared to pay for your share of the doctor’s bill, but it’s especially important to understand insurance terms if you’re shopping for health insurance. I know when you’re healthy it’s tempting to ignore deductibles and out-of-pocket maximums because chances are you won’t need much care, but when you need health care these five terms directly impact how much you pay for health coverage.
When you’re comparing health insurance plans, the first two numbers to look at are the premium and the deductible. they aren’t the only numbers to pay attention to, but they’ll make up most of the cost of your coverage.
There are a number of insurance terms to understand:
1. Premium: The Monthly fee for your insurance.
2. Deductible: How much you have to pay for health care first before your insurer pays.
3. Co-payment: Your cost for routine services to which your deductible does not cover.
4. Co-insurance: The percentage you must pay for health care after you’ve met your deductible.
5. Out-of-pocket maximum: The absolute max you’ll pay annually.
Are you still confused, don’t worry I will explain these terms in more detail.
Understanding Your Premium:
A premium is a monthly bill you pay to keep your coverage in effect, how premium is calculated can be complicated. Health insurance premiums don’t have a fixed price, they depend on several factors. The factors are all related to your risk of needing expensive health coverage. These factors include your current health condition, your age, lifestyle, and where you live.
The process of deciding how much risk you have and pricing your premiums to match that risk is called medical underwriting. It’s important to remember that each insurance company has a different set of rules they use for medical underwriting. What one company consider high risk might only be moderate risk for another company, that can mean a big difference in your premium.
Understanding Your Deductible:
The deductible refers to the amount of money that the insured would have to pay out before any benefits from the health insurance policy can be used. This usually a yearly amount so when the policy starts again, usually after a year, the deductible would be in effect again. For example, if you have a $2000 deductible and have to undergo three $800 surgeries, in a year, you will have to pay the full bill for the first two surgeries and $400 of the third surgery, your insurance company will cover half of the third surgery. Deductibles can range from a few hundred dollars to several thousand. Many health plans offer a choice of deductibles. You’re only responsible for the deductible when you receive service.
The purpose of health insurance deductibles is a way to offset the cost of health care. Health insurance deductibles require the insured to pay a certain amount towards their health coverage before the insurance company has to begin paying under the health insurance policy. The insurance company considers the amount of the health insurance deductible when determining how much the premiums for the health insurance coverage will be.
Understanding Your Co-payment:
Your co-payment is the fixed amount you pay for using routine services like doctor visits, going to the emergency room, or buying prescription drugs, the payment is the same regardless of the extent of the visit or cost of the drug. For example a plan may require co-pays of $25 for office visits, $75 for emergency room visits, and $10 for generic prescriptions or $20 for name brand drugs.
Understanding Your Co-insurance:
The percentage amount that you have to pay for covered medical service after you has satisfied any co-payment or deductible required by your health insurance plan. For example, if your insurance company covers 80% of the allowable charge for medical service, you may be required to cover the remaining 20% as co-insurance.
Out of Pocket Maximum:
This is the cost one would pay out of their own pocket. An out-of-pocket expense can refer to how much the co-payment, co-insurance, or deductible is. Also, when the term annual out-of-pocket maximum is used, that is referring to how much the insured would have to pay for the whole year for health care including co-pays, deductibles, and co-insurance. If your policy carries a $3000 out-of-pocket maximum and you get sick and have to have a lot of health care services, the most you will pay in a year is $3000, after that the insurance company picks up the rest of the cost.
After reading these insurance terms and getting the understanding of the information about these five insurance terms you can fairly go out to any insurance company whether it’s online, offline, or anywhere and compare insurance plans.