Health insurance can seem complicated with a quick glance that requires some know-how to navigate the best options for your health needs. Finding the right health insurance policy can help you save money when it comes to medical bills but knowing the basics will build a foundation of knowledge that will prepare you to shop for the best policy for you.
The most important terms to know about insurance policies are premiums and deductibles that will be determined by your health needs along with your budget. A premium is a monthly cost that you pay individually, or the premium is paid with your salary for your company if you are offered benefits.
A deductible is a number of an annual threshold that is distinct for every plan, for example, if your deductible is $1,000 that’s the amount you need to spend out-of-pocket on healthcare each year before the insurance starts covering your medical bills. Deductibles can range from a couple of hundred dollars to several thousand dollars and these terms are related in one simple way through monthly payments.
Plans with higher monthly premiums, meaning you’re paying more every month, tend to have a lower deductible so your insurance will start paying your medical bills sooner. This option is a good plan for people with significant medical costs the following year.
Having a lower monthly premium tends to cost in a higher deductible that is a better option for healthier people that are willing to take risks with higher costs for major medical bills. For example, if you pay a $100 premium every month with a $1,000 annual deductible and you have a major medical procedure, you will pay the amount until matching your deductible when your insurance starts to pay off a certain portion of the medical bill depending on your insurance policy.
This is just the basics of learning about which health insurance plan is best for your needs with other terms to learn such as out-of-pocket, co-insurance, in-network, out-of-network, and co-pay. Start with the basics and work your way towards learning the other terms so you can gradually become insurance savvy. The research for this article was sourced from CNBC.