It’s not enough that a person should have insurance, it is equally as important they know what type of coverage they are buying. Nitin Chhoda explains the difference of premium, deductible, and co-payments types of insurances.
If you want to save money on health insurance in the United States, first you have to understand just what it is you are responsible for paying when you need healthcare.
Insurance and benefits and physical therapy documentation can be incredibly confusing, partially because insurance companies use certain terms to describe what you will be paying.
If the average citizen was better educated about insurance and benefits, they can make better decisions about healthcare and insurance. Healthcare providers are also better off when patients understand their responsibilities and what is covered by their insurance benefits package.
Below are the commonly misunderstood terms that related to payments that patients must make as part of their healthcare insurance and benefits responsibility.
Premium
The premium for health insurance is the monthly, quarterly, or annual payment that the patient makes to the health insurance company. By continuously paying the premium, a patient remains insured. If the patient stops paying the premium, or pays the premium late, insurance and benefits can be withdrawn.
For employer insurance plans, often the employer pays the premiums for employees. This is not always the case, but even when the employer does pay, they tend to reduce the salary for the position based on the cost of adding another employee to their insurance plan.
Deductable
The deductable is usually referred to as a cash amount, and it is the cash amount that the patient is responsible for paying. Most plans for insurance and benefits will include a deductable, and as the deductable rises for a different plan, the monthly premiums go down.
For employer plans, you may not have a choice unless you are choosing between an HMO and a PPO. The word deductable is used in insurance and benefits as the amount of money you have to pay before you can start benefiting from your policy.
For example, if your deductable amount is $500, no matter what you go to the doctor for, the first $500 in bills are yours to pay. If you want to have a higher deductable, you can get a cheaper insurance and benefits plan. But you’ll be paying the amount before you can collect benefits.
If you rarely go to the doctor, a high deductable can save you money. If you need medical care suddenly and it will cost thousands of dollars, you only pay the deductable and the rest is covered by your insurance company.
Co-Payment
A co-payment, or co-pay, is also a cash amount. Some insurance and benefits plans are zero deductable plans and instead they require that you pay a percentage or flat fee for each visit to the doctor.
Even some plans with deductibles include co-pays for standard visits to the doctor for general check-ups.
Knowing the details of your insurance and benefits is different from understanding the insurance and benefits you are entitled to.
Most people who are healthy never even think about their co-pay or deductible until they need to go to the doctor and they find out that the amount is not yet billable to the insurance company. Often, this realization comes at great cost to the patient and the healthcare facility.
