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.