What Is a Health Insurance Premium?
A health insurance premium is the price an insurance company requires to provide coverage to an applicant. Depending on the insurance plan, the features and the mode of payment, along with the insurer's assessment of the applicant's information, all affect the cost coverage. Although the price of health coverage has skyrocketed over the years, not having insurance can be a more costly decision.
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The Facts
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A health insurance premium is the amount the insurer determines is adequate to cover the amount of risk the company is agreeing to assume. insurers consider several critical factors in the process of setting a premium total, including age, gender, current health status, pre-existing conditions, your location and whether you smoke. Premium costs have risen substantially in recent years, with workers paying $1,600 more in premiums annually for a family plan by 2009 than they did in 1999.
Benefits
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Paying your premiums in a timely fashion gives you the peace of mind of knowing that you and your family members will be covered for the cost of receiving health care when an injury or illness happens. People who are insured feel they can visit their physicians more for preventive care, which keeps them in good health and detects potential problems in their early stages. Having health insurance will protect you and your family's financial future as well, as an expensive hospital bill can bring major financial trouble if it is paid out-of-pocket.
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Types
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Many factors can affect your proposed premium rates. There are two types of health insurance plans to choose from: managed care and indemnity health. If you want cost-effective health coverage, choose a managed care plan. These plans provide a network of doctors in your geographical area. You may be required to choose a primary care physician from the network who will handle your health care needs, which is one of the drawbacks of this type of plan. Seeing a non-network doctor gneerally requires a referral and higher out-of-pocket costs.
If the freedom to choose a doctor regardless of location and cost suits you, choose an indemnity health plan. This form of insurance can reimburse you up to 100 percent of your claim. These plans are expensive and doctors may require you to pay the bill up front instead of waiting for the insurer's reimbursement.
Considerations
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If you are looking for a lower premium payment, other factors besides the plan type and your personal risk profile may come into play. For example, a higher deductible (the amount you must pay before the insurance starts to kick in) might reduce your premium. Other considerations to look for are your co-pay amount for doctor visits and the coinsurance, which is the remaining bill amount after the deductible and co-pay havebeen satisfied. Increasing these out-of-pocket expensive for yourself might also give you the ability to reduce your premium.
There are different methods to pay a health insurance premium. The most common mode of payment is monthly. However, you can pay your bill annually semi-annually or quarterly, sometimes for a reduction in overall premium expenses.
Warning
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Health insurance companies want to diminish their risk as much as possible, and they will inject every negative factor into the formulas they use to establish your premium. Although some health problems are out of your control, concerns such as smoking, drinking and being overweight are situations you can minimize. These factors will raise rates and with premiums rising at a 5 percent clip in 2008, it isn't necessary to give insurers an extra incentive to raise the costs further.
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