Friday, 27 May 2016

5 Things to know when buying Insurance in America

I recently spoke with someone who just graduated from college and had obtained a job that offered health insurance, which therefore put her in a situation where she could no longer be covered under her parents’ insurance.

tips buying insurance in americaSince she had never shopped for insurance, she knew very little about what a great plan for her would look like, let alone if the one offered through her job was a plan reasonable for what she would need. 

She had never educated herself in insurance terms, but said she wished she had known these when she had to research Individual Health Insurance:

5 Things essential to understanding insurance 

1. Premium: The money that you owe the insurance company for insurance is called your premium. When you buy the insurance you decide if you want to pay monthly, bi-monthly or annually, whichever is best for your situation. 

You can also decide if you would like the money automatically withdrawn from your account or if you would like to send in a check. Also if you receive insurance through work, your employer would pay a part of this premium.

2. Copayments: the amount you pay out of pocket when you visit a doctors’ office or buy a prescription is called the copayment. This money is separate from the amount you will be billed from the doctor’s office. The copayment is paid at the visit. Copayments can vary between $15-$30 depending on your plan and provider.

3. Coinsurance: Some people get confused between coinsurance and co-payments (which we just spoke of). When purchasing you choose from a variety of plans. Some have a percent that you pay and the percent the insurance company pays after your deductible has been met. 
The percent that you are required to pay is called coinsurance. For example if your plan is a 70%/30% plan your insurance provider will pay 70% of your medical bills and you will be required to pay the remaining 30%.

4. Deductible: Your deductible is the total amount of money you pay out of pocket per year before your coinsurance kicks in. There is a certain amount that needs to be met by each individual and then an overall amount that has to be met by the family as a whole. It is important to know that all the premiums and copayments you pay during the year do not count toward your deductible.

5. Out of Pocket Maximum: The out of pocket maximum is the TOTAL amount of money you will pay for your health insurance. Say your out of pocket maximum is $5000. The money you pay toward your deductible counts toward your out of pocket maximum, as well as the remaining amount you pay because of your plans coinsurance. 

Once you have paid $5000 out of pocket your insurance provider will cover your remaining costs for that year. You will no longer have to pay coinsurance on your medical bills once your out of pocket maximum has been met.     

Understanding health insurance

tips buying health insurance in americaIf you understand each of these terms, then you are ready to start looking for individual health insurance. But, if you still feel that you need help understanding the terms and how they apply to insurance, contact an experienced insurance broker to have him explain them to you more fully. 

This will help you stay out of the unfortunate situation of buying the wrong insurance for your state in life.