Health insurance is a contract that allows a consumer to pay a monthly premium in return for coverage of medical expenses. It can cover most costs of a hospital stay, doctor visits and preventive care.
You can get health insurance through an employer, a private company, or through a government-run health insurance marketplace (such as a state exchange). These plans all offer different types and amounts of coverage.
A premium is a regular fee you pay to an insurance company or health plan. These payments typically are due monthly.
When you purchase a health insurance policy, there are several factors that can affect the cost of your premium. Among them are your age, zip code and tobacco use.
However, the biggest factor that can make a significant impact on your premium is your income. If you are eligible for a premium subsidy, your coverage costs may be reduced.
The cost of your health insurance depends on many factors, including the type of plan you choose and how much medical care you need. Deductibles and copays also play a role in your premium.
A deductible is the amount that you personally pay out-of-pocket before your health insurance starts paying for healthcare services. Deductibles can range from $0 to thousands of dollars, depending on the plan you choose.
You usually pay your deductible as a part of your insurance premium. This keeps your account active and helps you meet your cost-sharing obligations.
The deductible counts toward your out-of-pocket maximum, which is the total you owe for covered health care costs in the year. Once you reach this maximum, the insurance company pays 100% of your healthcare costs.
Typically, your deductible and all of your copays count toward this limit. The out-of-pocket maximum resets to zero at the beginning of each new policy period.
Deductibles can be difficult to manage, but many plans are designed to ease them. For example, some ACA plans exclude a set of preventive benefits like screenings, immunizations and preventive medications from your deductible.
Copays or coinsurance
Health insurance plans often include copays or coinsurance as part of their cost-sharing practice. Both are important to understand so you know how much you might owe each time you see a doctor or fill a prescription.
Copays are fixed fees that you pay directly to a healthcare provider (such as your doctor or a hospital) each time you receive a covered service, like a visit to the emergency room or an office appointment. They can be higher than coinsurance, so it’s important to understand the difference and how they can affect your out-of-pocket costs.
Copays are usually lower if you use doctors who participate in your health plan’s network. But you should also check your plan details to make sure you’re paying the right amount for a doctor you choose outside of your network. Many health plans waive copays for preventive care visits, such as annual physicals or vaccinations.
Networks are the groups of doctors, hospitals, labs and surgery centers that your health insurance plan works best with. These networks vary significantly from plan to plan and insurer to insurer, so make sure you understand what a network is and which ones are available when you shop for coverage.
The quality and cost of care within a network are a critical component of health insurance. That’s why payers establish adequacy standards for the number of in-network providers.
Insurers can reject providers from their networks for a number of reasons, including failing to meet their enrollment criteria or a shortage of a particular provider type in a specific service area. A narrow network is increasingly common, as employers and other purchasers seek to save money by limiting the pool of providers available for a plan’s enrollees to use.
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