The Gotcha Terms For Health Insurance Plans
How do you decide on your health insurance plan, you may ask? Health insurance plans can be confusing.
There are so many terms to understand and hidden gotchas if you are not careful.
Many people use health insurance every day, but don't really understand what they offer in ways of coverage and what pitfalls await them.
When looking at a health insurance plan, most people look for the obvious items; deductible amounts, co-pay, drug coverage, and monthly premium.
There are several other terms that are important to understand.
Often, these can have a bigger financial impact on you that those more commonly known terms.
Co-insurance is the percentage the company pays once you have paid your deductible.
These are commonly described as 80/20 or 70/30 or 50/50.
This means the company will pay for 80% of the bill after the deductible is met and you pay the rest.
Now, don't get too excited thinking you will $20,000 on a $100,000 hospital stay.
Policies also have co-insurance maximums (sometimes called stop-loss limits).
These limits are there to keep the portion paid by you from getting out of hand.
I would say $20,000 is a little out of hand.
The co-insurance maximum is the maximum you would have to pay after you have met your deductible.
An easy way to think of this is to add the coinsurance maximum plus your deductible.
This total would be your max out of pocket in one year (ignoring co-pays).
Lifetime maximums are also very important to consider.
A lifetime maximum is the amount the policy will pay out over its lifetime.
So if you have a $5,000,000 lifetime maximum, once the company pays out $5,000,000; the policy is terminated.
Unfortunately, many companies offer small lifetime maximums on their policies in order to keep costs down.
People often think the lower premium is just a better deal, but find out they have maxed out their policy at the point when they need the coverage the most.
In order to compare your health insurance plans on an apples-to-apples basis, it's crucial to understand the not so common terms.
The above will help you to make such a comparison.
This will allow you to make a more informed and educated decision when you shop for health insurance.
There are so many terms to understand and hidden gotchas if you are not careful.
Many people use health insurance every day, but don't really understand what they offer in ways of coverage and what pitfalls await them.
When looking at a health insurance plan, most people look for the obvious items; deductible amounts, co-pay, drug coverage, and monthly premium.
There are several other terms that are important to understand.
Often, these can have a bigger financial impact on you that those more commonly known terms.
Co-insurance is the percentage the company pays once you have paid your deductible.
These are commonly described as 80/20 or 70/30 or 50/50.
This means the company will pay for 80% of the bill after the deductible is met and you pay the rest.
Now, don't get too excited thinking you will $20,000 on a $100,000 hospital stay.
Policies also have co-insurance maximums (sometimes called stop-loss limits).
These limits are there to keep the portion paid by you from getting out of hand.
I would say $20,000 is a little out of hand.
The co-insurance maximum is the maximum you would have to pay after you have met your deductible.
An easy way to think of this is to add the coinsurance maximum plus your deductible.
This total would be your max out of pocket in one year (ignoring co-pays).
Lifetime maximums are also very important to consider.
A lifetime maximum is the amount the policy will pay out over its lifetime.
So if you have a $5,000,000 lifetime maximum, once the company pays out $5,000,000; the policy is terminated.
Unfortunately, many companies offer small lifetime maximums on their policies in order to keep costs down.
People often think the lower premium is just a better deal, but find out they have maxed out their policy at the point when they need the coverage the most.
In order to compare your health insurance plans on an apples-to-apples basis, it's crucial to understand the not so common terms.
The above will help you to make such a comparison.
This will allow you to make a more informed and educated decision when you shop for health insurance.
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