Many people think of health insurance as a waste of money or something too expensive to actually understand what it means and how it works. In reality, it’s actually a great investment that more and more people are opting for. Here’s everything you need to know about health insurance.
What Is Health Insurance?
Health insurance is a contract between a health insurance company and a person incurring medical expenses. The consumer pays the health insurance company a certain amount of money based on their contract and in return, the insurance company pays some of the insured person’s healthcare bills.
Health insurance contracts can have varying terms for which they’re valid depending on the agreement and they’re not universal, i.e., they cover a certain number of bills, types of treatments, doctor’s visits, and medicine.
Important Health Insurance Terms and Concepts
These are some essential insurance terms and ideas that you’ll hear often:
Before the insurance company pays its share of the costs, you’re required to pay a certain amount each year for your insurance known as the deductible. If your deductible is $1500, you’ll have to pay the first $1500 of medical expenses, and afterward, the insurance company will pay its share.
Copayment or Copay
Every time you acquire a service that’s subject to copay, you’re required to pay a fixed, upfront amount known as the copay. For example, a visit to a doctor might be subject to a $30 copay and the insurance company pays for the rest of the expenses of the visit.
Some plans have cost-sharing methods if they don’t have a copay. The higher your premium, the lower your copay.
Out of Pocket Expenses/Cost-Sharing
There are the costs, apart from premiums, that you’re required to pay when you acquire any medical care.
A percentage of the medical care cost is known as coinsurance. For example, if it’s 20% for an X-Ray that costs $1,000, you’ll pay $200 out of it while your insurance company handles the rest of the payment. The higher your premiums, the lower the coinsurance.
Annual Out-Of-Pocket Maximum
The maximum cost-sharing that you’re responsible for in one year is known as the annual out-of-pocket maximum. It’s the sum of your deductible, copays, and coinsurance, excluding your premiums.
Generally, people don’t reach this limit but if you do, the insurance company takes up all the covered costs for the rest of the year.. If you pay higher premiums, you’ll have lower out-of-pocket limits.
While people tend to use the terms covered and covered benefits interchangeably, it’s important to know what both of them actually mean.
A ‘covered benefit’ is a health service that is included in your health insurance policy, such that the health insurance service will pay for it once you’ve paid your share of the cost. ‘Covered’ means that cost of health services can be paid by the insurance company.
How Much Does Health Insurance Cost?
Health insurance costs vary a fair bit. Your costs will differ depending on the kind of coverage you opt for, the particular plan you get, your health conditions, your age, and the deductible. There are numerous factors that make it more complicated.
Generally, there are levels of coverage split into four categories available through most insurance agencies. These are: bronze, silver, gold, or platinum, with the higher levels providing more coverage than the others with a higher price tag as well.
Who Needs Health Insurance?
Most people can benefit from health insurance. Considering the rising costs of healthcare, it’s more important than ever for people to acquire coverage. Health insurance covers a variety of treatments, ranging from major surgeries to life-threatening health conditions and more.
Many people tend to acquire health insurance earlier in their life in order to get really affordable premiums that last for a long time. It’s considered a risk management instrument and an investment for health, allowing people to save up a lot of money.
How Can You Get Health Insurance?
In the United States, most states are required to provide health insurance to their employees. It’s likely that your employer has some health insurance option as remuneration, but you’ll have to ensure that it’s enough. This is why many people opt for additional coverage or get coverage for their loved ones.
It’s recommended that you get in touch with reliable health insurance agents for help to make the process easier.
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