Understanding Health Insurance: Premiums, Deductibles And Co-Pays

If you're in the market for buying your own health insurance, then you may have come across some confusing terms. Premium, deductible and co-pay are all terms that are important to know when choosing a policy. All are related to the amount you will have to pay out of pocket when you use that policy.  If you're wondering what the differences between them are, considering the following information.


Premiums are the monthly payments you pay the insurance company each month to keep your policy. They are usually based on how much coverage the policy has and the amount of its deductible. Generally, the higher the premium, the higher your coverage. If you are someone who is rarely sick, you may be able to get a policy with a low premium and less coverage. If you are sick a lot or have a chronic illness that needs constant medical care, then you might financially benefit from a policy with a higher premium.


Premiums and deductibles go hand-in-hand, and it's important to consider both when choosing a policy. A deductible is the amount that you are required to pay out of your own pocket before you can begin to receive benefits from your policy. For example, if you have a $5,000 deductible, then you will not receive any benefits until you have spent at least that amount in medical expenses. Since the Affordable Care Act became law, certain routine preventative procedures, such as certain exams and vaccines, are no longer subject to a deductible. However, anything else is still subject to your policy's deductible. Policies with low premiums generally have high deductibles and vice-versa. As with premiums, you should consider your health status when choosing a policy with a high or low deductible.


Co-pays are a kind of cost-sharing that you still have to pay out of your own pocket for procedures that are covered by your insurance. Co-pays can be a fixed amount, or they can be a percentage of the cost of the procedure. For example, you may have a policy that pays 60% of a certain procedure that costs $100. That means the insurance will pay your doctor $60, and you will pay $40 out of your own pocket. Co-pays are tied to premium amounts because the higher the premium, the less you will likely have to pay for co-pays if you have to pay anything at all.

Premiums, deductibles and co-pays are all things to consider when buying your own insurance. The amounts of each depend on the amount of coverage you need or can afford. You should choose a policy that is the most cost-effective for you. If you need help choosing a policy or need help figuring out how much health insurance coverage you need, contact a health insurance specialist from a company like David Paulson Agency Inc

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