(Best Syndication) Employer based health coverage is disappearing leaving many employed individuals to make their own health care insurance decisions. Due to the high cost of health insurance, many employers are either scaling back their coverage or eliminating it all together, according to a survey by the non-partisan Kaiser Family Foundation.
So what are the differences in health care planes, and which one is best for you? This presentation will provide some information. But first: what is health insurance? Health insurance is a form of group insurance, where policy holders share the risk. Not everyone gets sick at the same time, so most of the premiums go to paying the expenses of those who are. For the most part, in the United States, health insurance is provided by private insurance companies who must make a profit. .
Here are some terms:
Premium: A premium is the amount of money the policy holder pays each month for their coverage.
Deductible: The deductible is the amount the policy holder has to pay out-of-pocket before the health plan kicks in and pays. If a policy holder has a $1,000 deductible, he or she must pay the first one thousand dollars. The expenses may include doctor’s visits, medication, hospitalization etc.
Copayment: The copayment is the amount that the policy holder must pay for a doctor’s visit or other service. For instance, a policy holder may have to pay a $10 co-pay for each doctor visit.
Coinsurance: Coinsurance is similar to a copayment, except this is a “percentage” the policy holder must pay for a service. A customer may have to pay 20% of the cost of surgery.
Coverage Limits: The coverage limit is the maximum an insurance company will pay for a procedure. For instance, if an insurance company only will pay a maximum $100,000 for heart surgery, but the hospital charges $120,000, the policy holder will have to pay the extra $20,000.
Maximum annual or Lifetime Coverage: The lifetime coverage is the maximum an insurance company will pay out in total over your lifetime. There maybe yearly caps as well.
Out-of-pocket Maximums: The out of pocket maximum is where the member’s payment obligation ends. The health insurance company may pay all of the costs after this level is reached. For instance, some insurance policies will pay for every prescription drug after the $500 yearly threshold is reached.
Exclusions: The insurance company may exclude certain procedures or drugs. They may exclude experimental options.