Welcome to “Health Insurance 101”. If you
don’t deal with insurance often, the terminology can be kind of confusing. But
don’t worry — you’re not alone. Julie has a few questions of her own and
this quick course will make you both experts in no time. Choosing the right coverage starts with
knowing a few keywords and doing some simple math to estimate, “How much will
you pay in a year?” First, there’s the premium. That’s the
monthly cost of your insurance. Now, your employer might pay a portion, or all, of
the premium so for this lesson be sure you’re only
adding in the amount YOU have to pay. Then there’s the deductible. You don’t have to pay this for
preventive care, but for other services this is the amount you pay before the
insurance starts covering some of your cost. If you happen to be really healthy
and don’t go to the doctor much, you may not even reach your deductible. Once the insurance company is paying
part of the cost, your portion is called a copay if it’s a flat dollar amount, or
coinsurance if it’s a percentage. These costs will depend on your need for
services and prescriptions throughout the year. So add all these together and you have
an estimate of what you might spend on health care in an average plan year. But
what if something unexpected happens? Well, it’s important to consider how much
your costs would be if you or a family member had a major medical expense. Unexpected health care costs can add up quickly but luckily each plan comes with a
safety net called the “out-of-pocket maximum”. This is
the most you could possibly pay in a plan year for in-network services. If
your medical bills surpass this amount the insurance will pay one hundred
percent of your in-network expenses for the rest of that plan year. So how does all the math add up? In general, a plan with a higher
deductible and a higher out-of-pocket maximum will cost less in premium. You’re taking on more of the risk so you pay less up front. If you want a
lower deductible and out-of-pocket max so the insurance company takes on more
of the risk, you’ll pay a higher premium. The key is to find the right balance for
you, so you’re comfortable with what you’re paying and the protection you’re
getting in return. Of course, it’s not all a numbers game. You should also consider which doctors
you want to use and how you will access your care. But now that you and Julie know the
basics, you should each be able to compare your options and choose the plan that
works best for you.

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