Everything You Need to Know About Health Insurance


Understanding health insurance is important to ensure that you know exactly what fees you must pay for out-of-pocket and which ones your insurance provider will cover. Learning some basic vocabulary for health insurance costs and types of plans will help you decide on the right plan for you.If you’re confused by health insurance terminology, you’re not alone. According to Dan Mangan, contributor to CNBC, only four percent of Americans surveyed were able to correctly define the terms co-pay, deductible, co-insurance and out-of-pocket maximum. Understanding health insurance is important to ensure that you know exactly what fees you must pay for out-of-pocket and which ones your insurance provider will cover. Learning some basic vocabulary for health insurance costs and types of plans will help you decide on the right plan for you.

Premium

According to Cathy Pareto, contributor to Investopedia.com, your deductible is simply the monthly amount you pay for health insurance. Each plan and insurance provider charges a different premium, so it’s definitely worth comparing premiums among insurance carriers before choosing one, as Lacie Glover with Nerdwallet.com advises. Your premium will also vary depending on which state you live in, your age and how many family members are included on your healthcare coverage.

Deductible

Even if you have insurance, this does not mean that the carrier will pay for 100 percent of your medical expenses. Your “deductible” refers to a specific amount you must pay yourself before your provider will start paying a percentage of your bills. It’s important to note that your monthly premium doesn’t go toward paying the deductible.

Co-insurance

This term indicates the percentage of a medical bill that you must pay once you have paid the deductible amount. For example, if you opt for a health insurance plan that provides 60 percent co-insurance, the carrier will pay 60 percent of each medical bill you receive once you have paid the deductible amount. If you have a PPO plan, you will most likely have co-insurance. For the best co-insurance deals, make sure to opt for an in-network provider since insurance carriers favor these doctors rather than out-of-network ones.

Co-pays

Usually associated with HMO plans, co-pays are defined as a set price you pay each time you purchase a prescription or visit a doctor. Each health insurance plan will have a different co-pay amount, so it’s worth shopping around before you select a healthcare policy.

Out-of-pocket-maximum        

Per Cathy Pareto with Investopedia.com, this term refers to the amount you can expect to pay out of your own pocket each year, before your health insurance provider pays 100 percent of your remaining bills. If you’re healthy, you most likely won’t meet the out-of-pocket-maximum, so you’ll have to pay for everything out-of-pocket. However, if you want a safeguard against medical emergencies and serious illnesses, this provision is a cost-effective choice in the long-term.

Preferred Provider Organization (PPO)

One of the benefits of a PPO plan is that you don’t need a primary care physician’s referral before you can see a specialist. If you have this type of plan, you will save more money if you visit an in-network doctor rather than an out-of-network one. However, one downfall of this plan is that the premiums are usually higher than that of an HMO plan.

Health Maintenance Organization (HMO)

If you have an HMO plan, you can expect a more affordable premium than if you had a PPO plan. There are no deductibles associated with an HMO. This plan does require you to have a primary care doctor’s referral before you can see a specialist. You will also have to clear any prescriptions and non-primary care visits with your insurance carrier.

Point-of-Service (POS)

This is a type of hybrid plan that combines HMO and PPO plan aspects. POS plans require you to pay a co-payment. There’s also a high deductible if you go to an out-of-network provider, while there is no deductible for going to an in-network provider.

Equipped with this knowledge, you can now enjoy more confidence and peace of mind next time you are faced with a medical expense.

 

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