Health insurance is very important. With the rising costs of medical care, not many people can afford to pay for health-related services out of the pocket. Health insurance makes a huge difference, but it can be complicated to understand. It is helpful to familiarize yourself with the basics of health insurance.
Each month, policyholder pays a set amount called a premium. This also applies to other types of insurance like auto insurance. The deductible is the amount you need to pay yourself before the health insurance covers expenses. Health insurance that is affordable usually has a high deductible. When you go to the doctor for a covered service, you need to make a copayment. For example, your copayment may be $25 for a doctor's visit, while the total visit make cost $125. The insurance pays the $100. Copayments also apply to prescriptions. In the case of coinsurance, the insurance provider covers a percentage of your health bill and you pay the other percentage. This setup is also called percentage participation. If your coinsurance rate is 75/25, your insurance provider pays 75% of the charge and you pay 25%.
Health insurance companies do not cover all services. Covered health insurance services vary from one provider to the next, but many have exclusions like dental care, cosmetic surgery, and pre-existing conditions. Therefore, if you want cosmetic surgery, you might need to pay for it on your own. A good idea would be to sign up for dental insurance, as it can help with the costs.
There is, obviously, a limit to what your provider can offer. The coverage limit is the maximum amount of money that your health insurance will pay over a given period. It may apply to a year or to the lifetime of the policy. You will have to take care of expenses that go beyond this limit. There is also an out-of-pocket maximum, which is maximum amount you will pay out of pocket for medical expenses during a given period. When you reach this maximum, the health insurance provider
covers the remaining costs.