Get the best details that making sense of premiums and deductibles

For many people, purchasing the health insurance plan comes down to a single question “How much do I have to pay”? Health Insurance as any other insurance has its own definition and without which a health insurance comparison cannot be made. When buying an insurance people often meet with various words and the two most common among them are premium and deductible. Here is a list of some most important health insurance terms that can help you make an educated and smart decision when selecting a medical plan.

When purchasing a plan you should not buy it on price alone. Getting best coverage that meets the demand of your health needs should consider as a priority. Although there is no way for escaping it, the plan needs to fit your budget. When you are comparing different health plans, the two things that need to be considered are premium and deductible. These are not just the words to pay attention to instead they will make up most of the coverage of your insurance plan.

Premiums:

The premium is an easy concept and can be defined as a bill that you have to pay monthly to keep your coverage in effect. But, how to calculate this premium is complicated. Health Insurance premium does not have a fixed value, it depends on various factors. The factors are all depending on the risk of needing expensive health care. These factors include your age, your lifestyle, and your current health status. Some of the insurance companies access the risk based on where you stay.

The process of determining how much risk one has and the pricing of premium to match that risk are known as medical underwriting. It is important to understand that every company has a different set of rules and regulations that they use for underwriting. What one company considers high-risk can only be considered as a moderate risk by another company.  This can further conclude a great difference in your premium. So it is advisable to compare the options provided by reputed companies.

Deductibles:

A deductible is that fixed money of medical costs of which you are responsible for paying before your health insurance coverage begins picking up the bill. For example, if the total amount for a simple surgery is 10,000$, you have to pay 1000$ first and the rest of the amount will be paid by the insurance company.

Deductible have a wide range from a few 100 dollars to several thousand. Many health care insurance companies offer a choice of deductibles. You are only responsible for deductible only when one receives care. When you are looking at plans always pay attention to the services that are covered in your insurance so that you don’t have to pay anything toward your deductible. Many insurance plans cover preventive care and routine and in that case, the client just has to make a small copayment. This care includes lab work, doctor’s visit, and other basic needs that keep you healthy.

Co-insurance:

Coinsurance is the health care cost sharing between the insurance company and the client. The cost share ranges from 80/20 to 50/50. This means if you have the plan of 80/20 the insurance company will cover 80% of the medical expenses and the rest 20% you have to pay. This cost sharing halts when the medical expenses reach out-of-pocket expenses. There are certain conditions in which the company pays 100% after the deductible is paid.

Out of the pocket limit:

It is the maximum amount you have to pay for the medical services in a year. Depending on the definition of terms it may or may not include the deductibles.

How the two (Premiums and Deductible) are related?

Both of these are directly related. An insurance plan with less deductible has higher premiums. So, most of the people choose the plans with high deductibles such that their monthly cost of coverage can be as low as possible.

In case you select a plan with a high deductible, in that case, consider opening the health savings account. You can pay for your health-related expenses and save your money tax-free in this account. If you still have any question in your mind, feel free to get an online quotation and compare the insurance plans and select the best as per your requirement.

Updated: May 31, 2019 — 5:08 am

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