Healthcare Policy

Health Insurance 101:

Health insurance is complicated. Very, very complicated. Not sure how it works? Read on to find out!

Key Terms:

  • Premium: The amount you pay every month to your insurance company for basic coverage.
  • Deductible: The amount you must pay out of pocket before your insurance coverage kicks in
  • Co-pay: A fixed dollar amount you pay for each medical procedure or treatment
  • Co-insurance: A percentage of the total cost you pay for each medical procedure or treatment
The Griffin Family

Let’s use the Griffin Family as an example to get the full understanding of exactly how insurance works. The Griffins are a family of 5. Peter and Lois have three children: Chris, Megan, and Stewie. Peter works full-time at the local Toy Factory, where he receives family health benefits.

What is a Premium?

Because Peter has a full time job, he is offered health insurance through his employer. Every month Peter has to pay a set dollar amount for his family’s insurance. This is called a premium. Similarly to a phone or cable bill, it is a fixed dollar amount you pay every month regardless of how much you use the service or not.

 

What is a Deductible?

Most insurance plans have a deductible. This is a dollar amount you must pay out of pocket before your insurance company will begin to pay for your treatment.

For example, Peter slips and falls while getting the mail and breaks his knee. He goes to the emergency room and racks up a $8,500 bill.

Because Peter’s plan has a $8,000 deductible, he is responsible for paying the first $8000 of the hospital bill. The remaining $500 of the bill, as well as any future medical care received by Peter or his family, are split between Peter and his insurance. Your deductible amount usually resets every year.

What is a Co-Pay?

Many insurance plans have a co-pay. This is a fixed, dollar amount you pay every time you receive medical treatment from a provider. The Griffins have a listed $20 co-pay for outpatient medical services.

Another example: Lois takes Stewie to the Pediatrician for his vaccinations. Stewie’s doctor charges $80 for the vaccinations. Because the Griffin family already met their $8000 yearly deductible, Lois only pays the pediatrician $20 (the co-pay amount), while her insurance plan pays for the rest.

How is a Co-Pay different from Co-Insurance?

A co-insurance is different from a co-pay in that instead of a fixed dollar amount, it is a percentage. The Griffin’s have a 10% co-insurance for inpatient medical procedures.

Last Example: Megan has a stroke and spends 3 days in her local hospital’s Intensive Care Unit. She receives a bill for $6,500.

Because she has a 10% co-insurance, she is responsible for contributing $650 (10% of $6,500) to her care. The remaining cost is covered by her insurance.

Well that’s the basics of premiums, deductibles, premiums, co-pays and co-insurances. Hope that helps!

#SeraphinHealth  #HealthcarePolicy  #HealthcareFinance

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