An Explanation Of Health Insurance Plan Costs
How to compare company health insurance plans
Health insurance plan costs can be somewhat complicated if you are unfamiliar with such plans and many people are surprised that, after paying what they consider to be a huge premium, they then get landed with another bill the first time they make a claim. So, before you are faced with a substantial medical bill, it is worth taking a moment or two to understand what sort of costs you can expect with your health insurance policy.
Premium. Your first cost is the plan premium which is the sum you will pay monthly (or sometimes quarterly or annually) for the benefits covered under the plan. If you are a member of a group insurance plan which has been arranged by your employer or a union then you will usually only be required to meet a percentage of the premium, which will often be deducted from your pay check. One common mistake is to focus your attention solely of the premium payable for a plan, but the cheapest health insurance premiums do not necessarily equate to the cheapest health insurance plan.
Deductible. The majority of health insurance plans will include an annual deductible and it is extremely important that you understand the details of any deductible which is applied to your policy. The deductible is a sum of money which you will have to find out of your own pocket before the insurance company starts paying out on any claims. So, if your annual deductible is $2,000 then you will have to pay the first $2,000 in medical bills each year before the insurance company will begin paying out. As is the case with many other forms of insurance, such as motor insurance, the higher the deductible on your policy the lower your premiums will be. If you have a family health insurance plan then it will typically include multiple deductibles for the individual members covered under the plan. One thing to look for when it comes to buying a low cost plan is cheap affordable health insurance with a low deductible.
Co-payment. The co-payment is a set sum of money that you will need to pay on each medical bill. The amount of the co-payment differs according to the type of health insurance plan you have and is usually lower on an HMO plan than it is on an indemnity plan. The co-payment may also vary for different medical services and, if you have an HMO plan, will usually increase if you elect for treatment outside of the HMO network.
Co-Insurance. Co-Insurance is a sum of money, expressed as a percentage, which you will be responsible for paying on each medical bill. A typical plan ratio is 80/20 which means that the insurance company will meet 80% of a claim and you will pay the remaining 20%. This percentage will normally be increased if you have an HMO plan and go outside of the HMO’s network. Additionally, where a claim exceeds what the insurance company considers to be "reasonable and customary" for the treatment in question you may be required to meet any additional cost.
Health insurance plan comparison is about much more than just comparing premiums and it is extremely important that whenever you request a quote, especially if you are requesting for a quote online, that you fully understand all of the costs involved.
To keep costs down in an HMO plan you should always try to stay within the HMO’s network and, if you do decide to go outside the network, then carefully compare the actual cost of treatment with what the insurance company considers to be "reasonable and customary" before undergoing treatment. You can also control your costs by increasing or reducing the deductible on many policies and by selecting higher or lower co-insurance. You must be careful though to ensure that you balance your costs against the likelihood that you will need to claim on the plan.
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Annual maximum benefit amount: The maximum dollar amount set by an MCO that limits the total amount the plan must pay for all health care services provided to a subscriber in a year.
Ethics in Patient Referrals Act: A federal act and its amendments, commonly called the Stark laws, which prohibit a physician from referring patients to laboratories, radiology services, diagnostic services, physical therapy services, home health services, pharmacies, occupational therapy services, and suppliers of durable medical equipment in which the physician has a financial interest.
Open PHO: A type of physician-hospital organization that is available to all of a hospital's eligible medical staff.
Surplus: The amount that remains when an insurer subtracts its liabilities and capital from its assets.
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