All About Premiums And Deductibles

Premiums, deductibles, copayments — what do all these terms mean? Without knowing what each one refers to, it’s hard to get a sense of the true cost of your health insurance policy. So let’s take a quick look at what each one is, and how it affects your policy.

The Cost Of Care

The first term most people encounter when they’re buying insurance is premium. Your insurance premium is the cost of keeping your policy in effect. Every month your insurance company will send you a bill. If you want to maintain coverage, you’ll have to send them a check.

The deductible is the amount you have to pay toward your actual medical bills before your insurance policy starts paying out. For example, a policy with a $1,000 deductible requires you to pay the first $1,000 of your medical bills. Then your coverage will start.

So you probably want a plan with a small deductible, right? Not necessarily. When you have a higher deductible, you typically get a lower premium. So that trip to the hospital may cost more, but the monthly check you write to the insurance company will be a lot easier to take. And if you’re interested in getting a Health Savings Account, your plan needs to have a minimum deductible of $1,050.

The other thing you should know is that many plans will “waive the deductible” for checkups and other preventive care. This means that you can get regular physicals and other routine care without having to pay the full cost. And HMO plans often have no deductible, which makes them an attractive option for many people.

Even with a waived deductible, you’ll still have to make a copayment when you see a doctor, visit the hospital, or fill a prescription. The copayment — or “copay,” as it’s usually called — is a fixed-dollar amount that you have to pay each time you get healthcare services. In HMO plans the copay for a doctor visit is often as low as $10. In PPO plans it is usually more in the $35 – $50 range.

Some plans also have coinsurance. Like a copayment, coinsurance is an amount that you’re responsible for paying. Coinsurance is expressed as a percentage instead of a fixed dollar amount. For example, you might have 20% coinsurance on doctor’s visits. So a $100 trip to the doctor would end up costing you $20.

Before You Enroll, Do The Math

When you compare health plans, don’t just think about the monthly bill you’ll have to pay. And don’t ignore a plan just because its deductible looks high. Instead, look at all the costs you’ll have to pay. Try to estimate how much you’ll use your plan, and add up all the costs of paying for the plan and paying for care.

A good insurance agent can help. They’re pros at making sense of the ins and outs of healthcare. They can size up your needs, and find you the right plan. To get matched with agents licensed in your area, just fill out our simple form to request free quotes. It only takes minutes, and you’ll be on your way to finding a policy that protects your health and doesn’t cost a fortune.