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Unless you are familiar with health insurance then the costs of a health insurance plan could seem to be a little bit complex and many people are surprised that, after they have paid what seems like a small fortune, they find themselves faced with a bill the very first time they make a claim. Before you are landed with a large medical bill therefore, it would be a good idea to take a moment to learn just what type of costs you can expect to incur on your health insurance policy.
The first and probably most obvious cost is the monthly premium or, in some cases, the quarterly premium or annual premium. If you are enrolled in an employer's or union group plan then you will normally be asked to pay only a percentage of the premium and this will frequently be taken directly from your pay check.
Most health insurance policies will also include an annual deductible which is a sum of money which you will have to pay before your insurer begins paying out on any claims. In other words, with an annual deductible of say $1,000 you will need to meet the first $1,000 of any medical bills every year before your insurer will begin paying out. You might be familiar with paying a deductible from your experience with car insurance and, if so, will know that the more the deductible on your policy the lower your premiums will be. Also, if you have a family plan then this will typically include deductibles for each family member covered under the plan.
Many plans will also include a co-payment which is a fixed amount of money which you will be required to pay towards every medical bill. Just how much you will be required to pay in co-payments will depend largely on the type of plan which you hold. For example, co-payments on HMO plans are frequently less than those on indemnity plans. Additionally, the co-payment will also vary between different forms of medical service and, if you are enrolled in an HMO plan, will normally increase if you are treated outside of the HMO network.
In cases where a co-payment is not required you will usually find that this is replaced by co-insurance which is very similar and is a sum of money, in this case expressed as a percentage, which you will be required to pay towards every medical bill. A normal co-insurance ratio is 80/20 meaning that your insurer will meet 80% of any medical bill while you pay 20%. As for co-payments, co-insurance will frequently increase if, as a member of an HMO plan, you are treated outside of the HMO's network. In this case you will also find that, when a claim exceeds what the insurance company considers to be 'reasonable and customary', you may be required to pay the additional cost.
By this time you will realize that comparing health insurance plans is about far more than merely comparing premiums. As a result, it is extremely important that you read the small print of any quote most carefully and avoid the common temptation to merely choose the plan with the smallest monthly premium.
If you wish to keep costs low and are a member of an HMO plan then you should try to stay within the HMO's network and, when you do feel that it is necessary to go outside the HMO's network, then compare actual treatment costs to what your insurer considers to be 'reasonable and customary' before you agree to treatment.
You can also keep your costs down on many plans by raising or lowering the deductible and by opting for higher or lower co-insurance. Exactly how this can be achieved is beyond the scope of this particular article but is a matter of balancing the various different costs against the likelihood of having to make a claim on the policy.