Sickness and injury are a regular part of life, and when they occur, the related expenses can sometimes be overwhelming. To help reduce these expenses and be prepared for unexpected health issues, many Americans turn to health insurance. When looking at health insurance, there are several basics that need to be understood before making a final purchase.
Premiums
Premiums are one of the most basic aspects of health insurance. In order to fund health insurance accounts, insurance companies require premiums. Premiums are periodic payments, usually monthly, that allow you to qualify for insurance coverage. Your premiums can vary based on certain circumstances such as your overall health, life habits like smoking, the amount of people being covered under the plan, and your age. If your employer provides an insurance option, the cost of your premiums may also vary depending on how much of the cost your employer contributes on your behalf.
Deductibles
Another important basic of health insurance are out-of-pocket costs. These costs are fees that are not covered by your health insurance, such as co-payments, coinsurance and deductibles. Deductibles are common in insurance plans and consist of the amount of money you must pay out-of-pocket for medical expenses before your insurance starts to pay. For example, you may have a deductible of $500, requiring you to pay for $500 of medical expenses out-of-pocket before your insurance will pay their percentage.
Coinsurance
Coinsurance is the percentage of each insurance claim you are responsible for after the deductible has been paid. For example, if your co-insurance is 20 percent, and your medical bill is $100, you would be responsible for $20 of that bill out-of-pocket.
Co-Payments
Co-payments are an additional cost that must be paid each time you receive a medical service. For example, if you have a $20 co-pay, you would be required to pay $20 each time you see your doctor, get a prescription filled or utilize emergency room care.
Government Programs
There are several government programs in place to help provide health insurance for people who do not have employer-supplied healthcare and cannot afford healthcare on their own. These insurance plans can range from being completely free to having discounted rates. The two primary government health plans are Medicare and Medicaid. Medicare is a federal program that provides health insurance for those at least 65 years of age, those who are permanently disabled and those with permanent kidney failure. Medicaid is a state-run program that provides health insurance for those with low-income and limited resources. Eligibility for Medicaid varies depending on what state you reside in.
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