Unless you are familiar with health insurance then the costs involved in a health insurance plan may seem to be somewhat complicated and many people are surprised that, after they have paid what seems like a small fortune, they find themselves faced with a bill the very first time that they submit a claim. Before you are landed with an enormous medical bill therefore, it is a good idea to take a moment to learn just what type of costs you should expect to incur on your health insurance plan.
The first and probably most obvious cost is the monthly premium or, if you so choose, the quarterly or annual premium. If you are a member of a union or employer's group plan then you will normally be required to meet only a percentage of the premium and this will normally be deducted from your pay check.
Most health insurance plans will also include an annual deductible which is a sum of money which you will be required to pay before your insurer begins to pay out on any claims. In other words, with a yearly deductible of $1,000 you will need to meet the first $1,000 of any medical bills every year before your insurer will begin paying out. You might be familiar with the principle of paying a deductible from your experience with car insurance and, if so, will also know that the more the deductible on your plan the lower your premiums will be. In addition, if you have a family health insurance plan then this will frequently include multiple deductibles for the individual members covered under the policy.
Many health insurance plans will also include a co-payment which is a fixed sum of money which you will need to pay towards every medical bill. Precisely how much you will need to pay in co-payments will depend very much on the type of policy which you hold. For instance, co-payments on HMO plans are frequently less than those on indemnity plans. In addition, the co-payment will also vary between different forms of medical service and, if you are enrolled in an HMO plan, will normally rise if you seek treatment outside of the HMO network.
In those cases where a co-payment is not required you will usually find that this is replaced by co-insurance which is very similar and is a sum of money, in this case expressed as a percentage, which you will again need to pay towards every medical bill. A typical co-insurance ratio is 80/20 which means that your insurer will meet 80% of each medical bill while you pay 20%. As in the case of co-payments, co-insurance will normally rise if, as a member of an HMO plan, you seek treatment outside of the HMO's network. In this case you may also find that, whenever a claim exceeds what the insurance company considers to be 'reasonable and customary', you could be required to meet the additional cost.
By now you will realize that comparing health insurance plans is about much more than simply comparing plan premiums. As a consequence, it is extremely important for you to read the small print of any health insurance quote very carefully and avoid the common temptation to simply select the plan with the smallest monthly premium.
If you wish to keep costs down and are in an HMO plan then you should attempt to stick inside the HMO's network and, if you do feel that it is necessary to go outside the HMO's network, then compare actual treatment costs to what your insurer considers to be 'reasonable and customary' before you undergo treatment.
It is also possible to keep your costs down on most plans by raising or lowering your deductible and by selecting higher or lower co-insurance. Just how this can be achieved is beyond the scope of this brief article but is a question of balancing the various different costs involved against the likelihood of having to claim on your plan.
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