Advantages of Health Insurance
No one plans to get sick or hurt, but
preparing for the unexpected is
advantageous for a number of reasons.
Health care benefits, included in an individual
health insurance plan, can help prevent you
from contracting a serious illness or diseases
and diagnose these problems much faster.
So what is health insurance anyway?
It’s a contract between you and your health
insurance provider. The contract is valid once
you buy one of many consumer driven health
plans; the agreement is the health insurance company will pay part of your medical costs whenever
medical care is needed.
How does health insurance coverage work?
The plan outlines how much you will pay and how much the insurance company will pay. These
payments are divided into different sections and enacted at different times.
A premium is the monthly amount the policy holder pays to keep the contract valid and active. This bill
is generally paid monthly, even if you don’t have any medical expenses that month.
A deductible is the amount the policy holder must pay to receive the health benefits and care given. This
amount is paid before the health insurance company will pay their portion.
The amount of the deductible can vary greatly depending on the plan. The cost of the deductible and
the cost of your premium have an inverse relationship.
If you are relatively healthy, you may consider having a lower premium and higher deductible. If you
have routine medical visits a higher premium with a lower deductible may be a better choice for you
and your family.
A copayment, most often simply called a copay, is a fixed amount the policy holder must pay after
you’ve met your deductible. The set amount for each copay is predetermined.
This practice is extremely common, especially with doctor visits. For example, say I went to visit my
primary physician after my deductible was met.
If the visit cost $175, I would pay a $25 copay
and the insurance company would pay the
remaining $150. Those expect to have frequent
doctor visits will greatly benefit from having
affordable health insurance.
Coinsurance is similar to a copay, but the
amount is determined by a percentage instead
of a set amount. For example if my coinsurance
responsibility was 20 percent, a $100 doctor
visit would cost me $20.
The health insurance benefits are numerous;
namely it saves you from high unexpected costs. On the whole, health care is not cheap.
For example, a three-day stay in a hospital can cost around $30,000. Even an injury that may seem
routine, like repairing a broken arm, costs thousands of dollars.
Out of Pocket
Most, if not all, personal health insurance plans also include an out of pocket maximum. For example, if
you got sick and had an out of pocket maximum of $5,000. Once you have paid a total of $5,000 through
your deductible, copays, and coinsurance, your health insurance provider will pay the remainder of your
bills for the year.
Finally, most insurance companies do not have a yearly or lifetime limit of the amount of money they
can spend on you or your family. You truly are protected from unreasonable financial hardship should
Photo Credit: Alex #. Proimos, Stevendepolo,