What’s a health insurance premium? Understanding health insurance is tricky until you learn the lingo. Watch this video to learn about premiums, deductibles, copays, coinsurance, and out-of-pocket maximums.
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What is a health insurance premium?
A health insurance premium is a monthly payment
to maintain my membership,
even if I don't use any services that month.
Think of it like a gym membership.
Even if I don't go to the gym every day,
I still have to pay my monthly fee
to keep my membership active.
That way, when I do want to work out,
I have access to all the equipment and classes.
Same goes for health insurance premiums.
I pay each month to make sure my coverage is ready
and available when I need it,
whether I visit the doctor that month or not.
So here's where it gets tricky.
A premium is only part of the total cost of my healthcare.
If you really want to understand
what health insurance costs,
you're gonna have to know a few more concepts
like deductibles, copays, and coinsurance.
So I'm gonna tell you all about those.
Every insurance carrier provides a summary
of what is covered in a plan
and will have different rules for what I will pay
and what they will pay.
When I pay for services like a doctor's visit
or prescriptions, I start contributing to a deductible.
A deductible is an amount that I pay
before my health insurance carrier starts to pitch in
and help pay for medical services.
For instance, I might need to pay a $500 deductible
before my health insurance starts to share the cost
of my doctor's visits.
My insurance carrier and I will share those costs
in the form of copays and coinsurance.
A copay is a set amount I will pay for services.
For instance, my generic prescriptions
might always cost me $20 for each refill.
Coinsurance is when I split the cost of services
with my carrier.
I might pay 40% for an outpatient procedure
and my plan might pay 60%.
Copays and coinsurance might be available
only after deductible is met,
but that all depends on the rules of my plan.
Another thing to know about premiums
is that they do not count towards my out-of-pocket maximum,
which is the most I will have to pay
for qualifying claims in a calendar year.
My health insurance carrier covers 100% of the cost
for claims after this amount is exceeded.
So let's say I have an emergency and need to go to the ER.
For months after my accident,
I need physical therapy and other treatments to recover.
Let's say my out-of-pocket maximum is $10,000.
If all my claims added up
to more than my out-of-pocket maximum,
my plan would cover 100% of my claims
for the rest of the year.
This is when I'd be really grateful
to have a health insurance plan.
