What is a Health Insurance Premium?
Health Insurance premiums are similar to subscriptions fees; health insurance premiums are certain amounts of money the insurance member (or employee, or guardian) pays the insurance carrier to continue coverage for themselves or another (in circumstances like employer paid health benefits). The amount of time between premiums depends on the specific plan and is normally monthly, quarterly, or yearly.
Why do you have a premium?
Health Insurance premiums buy your health insurance coverage and continue your current coverage. Even if you haven’t used your health insurance coverage for any services during a specific period you must still pay to be covered. You pay premiums so that, if you do get injured or sick, you will have your coverage waiting for you. Imagine the premium is a subscription to a magazine; regardless if you read the magazine or throw it away; you are still paying for the magazine. You pay for the magazine because you may want to read it or purchase a product in it. If you stop paying your subscription you will no longer receive the magazine, similar to if you stop paying your health insurance premium you will lose your coverage.
Is the Premium the only cost you will incur by purchasing health insurance?
There are many other payments, besides premiums, that go along with your health insurance plans such as copayments, coinsurance, and deductibles. These expenses are incurred when you use a service that is covered under your health insurance policy, such as seeing a doctor or going to the emergency room. Sticking to the magazine example, these other expenses (copayments, coinsurance, deductible) are similar to using your magazine to purchase a product that you found while looking at the magazine, so if you stopped paying for the subscription, you would not be able to purchase these products. For health insurance, instead of not being able to purchase the product, if you didn’t pay the premium, you wouldn’t be able to receive discounts on services and have to pay a significant portion more (by significant, I mean significant. It is good to understand that the majority of personal bankruptcies are filled because of health care costs. You want health insurance!). This post, being a micro post solely about premiums, will not go into further detail regarding these other expenses, but I will be making micro posts for them later on.
An Example Health Insurance Premium
An example of a health insurance premium would be paying $400 monthly to be covered under a health insurance policy.
The Summary of What a Health Insurance Premium is
The Health insurance premium is the payment you make to an insurance carrier to keep your plan in force, similar to a subscription. Thank you for reading, and have a great day!
Additional Disclaimer – Although I am an Insurance broker and a professional in the field, the Health Care laws are ever changing, especially in the age of the Affordable Health Care Act, and the laws, information, opinions, or understandings that I have wrote about may be obsolete by the time you come across them and I take no legal responsibility for what actions you may or may not take because of it. To keep yourself safe, please seek updated professional advice, because changes are happening and I would like to keep everyone safe from any misleading or dead information. Please check out the “Terms and Conditions” page for more information and/or bookmark my blog for upcoming changes and updates to the ACA. Thank you for reading, and have a great day!