Having health insurance is a necessity in today’s society. Without it, a sudden illness could put you in financial peril. However, understanding how health insurance works can be difficult. With that in mind, below are seven tips to help you understand your health insurance.
1. What Is a Premium?
One of the things you will have to pay as the owner of a health insurance policy is a monthly premium. Premiums can be thought of as the monthly cost of having insurance coverage. For example, a policy may cost $300 a month. This has to be paid whether the coverage is used or not.
2. What Is a Deductible?
A separate component of health insurance you may also be forced to pay is the deductible. The deductible is the amount towards healthcare bills a patient must pay before the coverage kicks in. For example, a person may have to pay $500 towards doctors’ bills before the insurance company starts making payments. Premiums do not count towards the deductible.
3. What Is a Copay?
After the deductible has been paid off, certain health insurance plans still require making a copayment or copay for short. For example, a certain plan may have a copay of 20 percent. This means that the patient pays 20 percent of the bill while the health insurance company pays the remaining 80 percent.
4. What Is an Out of Pocket Limit?
However, copays do not have to be made forever. There is a certain ceiling beyond which an insurance holder won’t have to pay anymore and the insurance company will pay 100 percent of future bills. This is known as the out of pocket limit.
5. What Is an HMO?
HMO stands for health maintenance organization. Under an HMO plan, only certain doctors, pharmacists, treatment centers, etc. are covered by the insurance without a specific referral from your primary physician. For example, an HMO may cover treatment at a certain hospital but not other health facilities.
6. What is a PPO?
PPO stands for preferred provider organization. PPO plans provide a patient with more flexibility to go outside the PPO’s network to obtain treatment. Referrals aren’t necessary, but there may be higher deductibles and copays.
7. What Is the Health Insurance Marketplace?
Soon many employees may be forced to purchase their plans on their own without the option of company health insurance. One thing that is designed around lowering the price of healthcare for individual consumers the health insurance marketplace. The health insurance marketplace is the means provided by the Patient Protection and Affordable Care Act for US citizens to purchase insurance and receive a significant government subsidy to offset the price. It is a website that can allow you choose different plans and then estimate a subsidy.
Health insurance is something everyone should have in modern society. However, before you choose your plan, make sure you are educated on the specifics of different policies.