Health insurance can either be group insurance (through your employer) or individual insurance (purchased by an individual to cover themselves and/or family members). The cost of health insurance is called a "premium". Premiums for group health insurance generally are paid monthly. Individual insurance can be monthly, bi-monthly, quarterly, semi-annually or annually. Employers often pay a portion of each employees health insurance premium, with the balance due deducted from the employees pay check before taxes.
The amount of the health insurance premium can vary for a number of reasons. One's age, sex, current/previous health conditions, type of plan chosen, number of employees (if group insurance) and coverage options to name a few all contribute to the cost of the premium. Similar to purchasing insurance for your car, there are variables that determine the premium amount for your car insurance. The age of the car, the number of miles driven too/from work, the age/sex of the driver, the deductible (the amount of damage you pay for first, before your insurance company pays) if you have collision or comprehensive damage, the options (ie. towing, rental car) you put on your policy etc.
Similar to car insurance, having health insurance does not mean you won’t have to pay for health care. When you get "minor" work done on your car--oil change, new tires, muffler, small door ding removed---your car insurance does not cover these "maintenance" costs. Health insurance often has "maintenance" costs one must cover as well. Depending on the type of plan you have, there are: deductibles, co-payments and co-insurance that are expenses paid by the individual before insurance pays.
Deductible: The amount an individual must pay for health care expenses before insurance covers the costs. Often, insurance plans are based on yearly deductible amounts.
Co-Payment: Co-payment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, a plan may require a $10 "co-payment" for each office visit, regardless of the type or level of services provided during the visit.
Co-Insurance: Co-insurance refers to money that an individual is required to pay for services, after a deductible has been paid. Co-insurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.
Next blog.....different types of health insurance medical plans.
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