March 23, 2008

Buying Health Insurance - You must know these terms

There are many factors to consider when you purchase Health Insurance. Instead of first asking about the policy benefits, you must first understand some basic policy terminology. A good broker will know how to build a health insurance policy with the benefits and features that are important to you. An inexperienced broker will try to sell you a particular plan, without regard to your needs. If it's in the policy "it's covered", but what if you do not need maternity coverage? Why pay for that feature?

The following terms are the foundation of every health insurance policy.

#1) Deductible. The deductible is the amount you must pay for medical services each year before your insurance begins paying.
#2) Co-payment. This is the portion of charges you pay to your provider for covered health care services in addition to any deductible. For example, $20 for an office visit or $15 for a prescription drug. It is similar to coinsurance, but it is a dollar amount instead of a percentage of the charges.
#3) Coinsurance. Once you have met your deductible, you pay coinsurance for additional medical care. It is a percentage of the billed charge. For example, your insurance company might pay 80%, and then you would pay 20%. It is similar to a co-pay, but is a percentage instead of a dollar amount.
#4) Probably the most important definition. Out-of-Pocket Maximum. The most you will have to pay in a year for deductibles and coinsurance for covered benefits.

An ideal policy would have a low deductible, a low office co-payment charge, a high insurance company coinsurance percentage and a low maximum out of pocket.

Consider the worst case scenario. If you suffered from a "brain tumor" and your hospital bills totaled $300,000, how much would you have to pay? With a good insurance plan, your maximum out of pocket is your liability limit or stop loss. Read your proposal carefully as some policies maximum out of pocket limits includes the deductible, while others may be in addition to the deductible.

Don't get fooled with the variety of new "No Deductible" plans available. You are paying for the deductible, whether you know it or not. Many zero deductible plans have a patient 40% or 50% coinsurance and a higher maximum out of pocket.

Understand your health insurance terms before buying any insurance policy. Shop online and compare plan features that are most important to you. A properly designed plan will reduce your premium payments and your total patient liability. For online quotes and plan comparisons, visit QuoteBroker