Health Insurance: Things you need to know!

HEALTH INSURANCE: THINGS YOU NEED T0 KNOW!

Recall that insurance is a financial agreement between an insurance provider and an individual.

This agreement financially protects the individual from unexpected events.

In this review, we will be taking a look at health insurance.

There are a variety of health related unexpected events that can occur. Let’s take a look at just a few.

A broken leg

A physical exam

A toothache

The flu

Now health insurance is not free. You have to pay what is called a premium. The premium is paid monthly, once a month, to the insurance provider.

You must also pay what is called a deductible.

The deductible is paid yearly, once a year. Once you have met or paid the deductible, your insurance provider will pay a percentage of your medical expenses. This is called co-insurance.

You are responsible for paying the rest of the expenses. What you pay is called co-pay.

Remember that co-pay is a percentage of the medical bill you must pay after the co-insurance has been paid.

Now this is a lot to think about!

So let’s take a look at an example.

Janie has a health insurance policy. She must pay a premium of $250 each month.

The chart below shows Janie’s insurance information.

Premium Yearly Deductible Coinsurance Primary Physician Specialist Urgent Care Prescription Medication

$250/month $1,200 80% $25 co-pay $35 co-pay $45 co-pay $25 co-pay

Janie’s premium is paid each month. So she pays 12 x $250 or $3000 each year.

After she pays her monthly premiums, she will need to pay her yearly deductible of $1,200.

Once this deductible is paid, her insurance will start to pay her medical expenses.

Janie also must make co-pays of different amounts to her primary physician, specialists, Urgent Care, and for prescription medications.

Suppose Janie has a bad fall and cracks a rib.

She has to go to the emergency room at the hospital for an exam and x-rays.

Thankfully, Janie has paid her deductible of $1,200. The hospital bill is $5,200! How much will Janie have to pay?

Let’s do the math!

Janie's Hospital Bill Summary: Charges . . . . . .. . . . . .. .. . . . . .. .

Paid by Insurance ......................

Paid by Janie ......................

Amount Janie Owes . . . . . . . . . . . . . . . . . . . . . .

$ 5,200 0.80 x 5,200 = $4,160 $ 35 $ $ 5,200 – 4,160 – 35 = $1,005

It’s a good thing Janie has health insurance!

She only has to pay $1,005 of a $5,200 bill.

It really does pay to have insurance! There are many different health insurance providers. You need to:

do some research,

shop around,

and choose the best provider for you and your needs.

Written by Genny Simpson 4/05/2013

All images are from MS ClipArt.