Is there such a thing as cheap health insurance? It hardly seems
possible when you look at the rise in hospital costs and
physician services. Insurance companies have the task of
underwriting the medical risk for insurance. The insurer then
issues and delivers the policy to the insured once they are
accepted into the plan. The policyholders then receive the
policy declaration pages that list all of the benefits and
features.
What are those benefits and features? How do they work after a
hospital stay? When you begin to find the answers to those
questions then you begin to understand what makes up the total
premium. When you receive your first benefit statement after a
hospital stay then you will begin to understand how the
deductible is applied and how the coinsurance works.
Simple claims analysis
1. Total inpatient expense for 4 days in the hospital including
physician services amounts to $4000.
2. Your policy has a $500 deductible with an 80/20 coinsurance
clause with a maximum out of pocket $2000.
3. You must pay the first $500 for your stay leaving a balance
of $3500.
4. You will pay 20% of that $3500 or $700 and the insurance
company will pay $2800.
When your 20% reaches $2000 then the insurance company pays 100%
of the remaining costs up to a million dollars (or 2 million
etc).
The health insurance buying trends indicate that people are
purchasing health insurance with higher deductibles. Deductibles
bring down the premium dramatically. There are some plans with
deductibles as high as $5000. This is called self-insuring
because in essence that is what you are doing for the deductible
amount.
Health Savings Accounts are also starting to become very
popular. These savings accounts are tax deductible. They are
like medical IRA'S. Contact your tax advisor or accountant for
more details.
Please see our recommended source for insurance quotes. We have
done the research so you don't have to.
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