Health Insurance

  Health Insurance💓💖.

How does Health Insurance Works?

Like all insurance, in return for a monthly fee called a premium, health insurance reduces the cost associated with a risk, in this case, excessive medical bills due to sickness or injury. However, unlike other forms of insurance, health insurance premiums are unique: 

                They are only based on a few factors, like age, location, and smoking habits, and not on your health status. That means if you have a pre-existing health condition, like diabetes or asthma, your insurer cannot raise your rates or deny you coverage. This is undeniably great for consumers, though health insurance also has a lot of problems, mainly the confusing jumble of terms: HMO, deductibles, the list goes on and on. 

                As explained properly, health insurance is not actually all that complicated. Let's walk through an example.

                Let's say Ann has a $200 monthly policy with a $1000 deductible, 20% coinsurance, and a $5000 out-of-pocket maximum. Let's also say she recently broke her leg playing soccer and has just been stuck with a $ 100,000 medical bill.

                How much of that enormous bill does she have to pay? Let's start with the deductible first. 

Deductible. 

                A deductible is simply the amount of money Ann must pay each year before her insurer starts paying their share. Ann's plan has a $1000 deductible. That means, for a $100000 medical bill, Ann must pay the first $1000 herself. Then, the remaining $99000 is split between Ann and his insurer, based on her plans.

Coinsurance.

                Coinsurance is the percentage of costs Ann must meet after her deductible has been met. Ann's plan has 20% coinsurance. That means for every $ 4000 the insurer pays, Ann must pay $1000. This cost-sharing continues until Ann reaches her out-of-pocket maximum.        

Out-Of-Pocket Maximum. 

                This is quite literally the maximum amount of medical expenses Ann has to pay each year before her insurer pays the rest. In the example, Ann's plan has a $5000 out-of-pocket maximum, and she is already spent $1000 on her deductible and $4000 on coinsurance. That means she has reached her out-of-pocket maximum, and her insurer will have to cover the rest.  

With Health Insurance...

                All in all, Ann only paid $5000 for a $100000 medical bill. If Ann didn't have health insurance, that payment would have been all on her! Ann is thrilled by this but also wonders if a similar type of calculation applies to routing services, like doctor's visits or medications. Well, no, as it generally turns out. Those routine expenses are instead covered by something called a copay.

Copay.

                Copay is a simple flat fee associated with a specific, routine event, like $25 for a doctor's visit or a certain prescription drug. as for you paying for these services, it couldn't be easier. Ann will either pay directly at the doctor's office or just get a bill from them later on. 

                Hopefully, you and Ann now have a better understanding of how health insurance works.