We’ve all been there, "My health insurance premium is too high and I am sick of paying every month for coverage I never use!" I have heard it a million times and when clients tell me that their health insurance it too high I don’t argue with them because THEY ARE RIGHT! Unfortunately since the emergence of Obamacare healthcare premiums increased.
ATTENTION: Did you know that since 2014 all Americans are required by law to have health insurance, and if they don’t have health insurance they have to pay an Obamacare tax penalty? It may not seem fair but the Affordable Care Act was implemented to make healthcare more affordable and accessible by obligating all Americans to purchase health insurance.
In response to these laws this article has been created to help Americans learn more about purchasing health insurance.
First off, what is a premium?
A premium is the cost a person pays to obtain insurance. Dependent on the type of insurance, premiums may be paid in a variety of ways including monthly or annual payments. Typically health insurance in New York is paid on a monthly basis.
Premiums should have an impact on a person’s decision to buy health insurance, however it should not be the primary factor dictating what plan you choose. In order to fully appreciate higher or lower premiums a potential health insurance purchaser needs to understand the premium, deductible and co-pay relationship.
A good health insurance broker will present three options when offering a health insurance plan. These plans include a high, medium, and low option, which are commonly referred to as Platinum and Gold for the high option plans, Silver for the medium option plan, and Bronze for the low option plan. A broker may not offer all plan tiers to a potential purchaser if the broker feels that the purchaser has no desire to purchase a certain plan, in which case they may elect to exclude it from the proposal. Regardless at the time of proposal three plan options are usually presented.
What is a deductible?
A deductible is the specified amount of money that a person must pay before an insurance company will pay a claim. For example, I have health insurance with a $5000 deductible and I have a procedure, which costs $10,000. I am responsible for paying the $5000 deductible before my insurance kicks in and pays the difference.
A higher deductible means that in the event of medical necessity, a person must pay more money out of pocket than they would if they had a lower deductible.
What is a co-pay?
A co-pay is the cost associated with a health insurance policy, which a person must pay if they visit a doctor or specialist. For example, I have a health insurance plan which has a $20 co-pay for both my general physician and specialist. If I go to my physician or specialist I have to pay $20 because my copay is $20.
How the Premium, Deducible, and Copay Relate:
- Deductible - $1,000
- Primary Care (Co-pay) - $25
- Specialist (Co-pay) - $40
- Premium - $750.40
This option has the lowest deductible at $1000 and has co-pays of $25 and $40 dollars. The reason that this option is the high option is because it has the highest premium, which is dictated by the plan's low deductible and low co-pays. This plan is good for someone who plans on visiting their doctor or specialist regularly throughout the year. Examples of medical specialists induce:
- Addiction psychiatrists
- And more...
- Deductible - $1,250
- Primary Care (Co-pay) - $30
- Specialist (Co-pay) - $60
- Premium - $747.27
The medium option has a deductible of $1,250 and co-pays of $30 and $60 dollars. This option is a good choice for someone who doesn’t visit the doctor’s office regularly but wishes to have a lower deductible in the event of a medical emergency.
- Deductible - $2,000
- Primary Care (Co-pay) - $40
- Specialist (Co-pay) - $70
- Premium - $654.16
The low option has a deductible of $2000 and co-pays of $40 and $70 dollars. This plan is good for a person who wishes to have health insurance instead of paying the Obamacare tax penalty and who doesn’t feel the need to visit their doctor or specialist regularly. This option has the lowest premium and has a higher deductible and higher co-pays.
People are always complaining about the premiums of their health insurance plans. What they often fail to understand is that the premium reflects the deductibles and co-pays they elected in their coverage. BE SMART and ask your insurance broker about ways to strategically alter your health insurance to customize a plan with deductibles and co-pays that fit your budget.
If you have questions about health insurance and ways to lower your premium for yourself, or your business, contact Skyline Risk Management, Inc. today at (718) 267-6600 to voice your concerns.