How to Health Insurance Works

how does health insurance work imagine you have a $100,000 heart surgery which is a covered medical expense under your health insurance plan and let’s say this health insurance plan has a $1,000 annual deductible 20% coinsurance after deductible a $2,000 out-of-pocket limit and a 2 million dollar annual limit on your health insurance coverage in this video we’ll explain how these different components of a health insurance policy work before we begin it’s important to note that any health insurance policy purchased after September 23rd 2010 will not have a lifetime maximum limit on most of the plan benefits and any health insurance policy purchased after January 1st 2014 will not have an annual limit on most plan benefits the first thing we’ll talk about in this video is a deductible what is a deductible typically a deductible is the amount of money you must pay each year before your health insurance plan starts to pay for covered medical expenses so with a $100,000 heart surgery bill you are responsible for paying the first $1,000 after this $1,000 deductible is met the insurance company will pay a percentage of the bill and you will pay the coinsurance let’s talk about coinsurance what is coinsurance typically coinsurance is a cost-sharing requirement where you are responsible for paying a certain percentage and the insurance company will pay the remaining percentage of the covered medical expenses after your deductible is met for a health insurance plan with 20% coinsurance once the deductible is met the insurance company will pay 80% of the covered expenses while you pay the remaining 20% until your out-of-pocket limit is reached for the year what is an out-of-pocket limit typically the out-of-pocket limit is a maximum amount you will pay out of your own pocket for covered medical expenses in a given year for a plan with a $2,000 out-of-pocket limit you will pay a one thousand dollar deductible and one thousand dollar coinsurance while the insurance company covers the remaining ninety eight thousand dollars of the heart surgery bill even if you’re hospitalized again in the same year the insurance company will pay 100% of your covered expenses until you reach your annual coverage limit what is an annual coverage limit some health insurance plans place dollar limits upon the claims an insurance company will pay over the course of a plan year so if you bought an insurance policy with an effective date of July 2011 your plan year would run from July 2011 until June 2012 if you have an annual coverage limit of two million dollars and you have medical bills that cost more than two million dollars during your plan year you would be responsible for paying those bills out of your own pocket once your new plan year begins in July 2012 your deductible coinsurance out-of-pocket limit and annual coverage limits would all reset and the insurance company would once again begin to pay your covered claims beginning September 23rd 2010 the Patient Protection and Affordable Care Act health care reform begins to phase out annual dollar limits starting on September 23rd 2012 annual limits on health insurance plans must be at least a two million dollars by 2014 no new health insurance plan will be permitted to have an annual dollar limit on most covered benefits some health insurance plans purchased before March 23rd 2010 have what is called grandfathered status health insurance plans with grandfathered status are exempt from several changes required by health care including this phase-out of annual limits on health coverage here’s one more concept you should be familiar with some health insurance plans offer co-payments what is a co-payment typically a co-payment or copay is a specific flat fee you pay for each medical service such as $30 for an office visit after the $30 copay the insurance company pays a remainder of the covered medical charges sometimes subject to the deductible and coinsurance certain recommended preventive services immunizations and screenings are covered with no cost-sharing or co-payments on health insurance plans purchased after March 23rd 2010 let’s say you’re not feeling well and went to see your doctor who charges $200 for the office visit if your insurance plan has an office visit copay ‘men of $30 then you will only be responsible for the $30 and the insurance company will cover the remaining 170 dollars but if you purchase your health insurance policy after March 23rd 2010 and you’re due for a routine preventive care screening like a mammogram or colonoscopy you may be able to receive that screening without making a co-payment you can talk to your insurer or your licensed a health insurance agent if you need help determining whether or not you qualify for screening without a copay there are five important changes that occurred with individual and family health insurance policies on September 23rd 2010 those changes are added protection from rate increases insurance companies will need to publicly disclose any rate increases and provide justification before raising your monthly premiums added protection from having insurance cancelled an insurance company cannot cancel your policy except in cases of intentional misrepresentations or fraud coverage for preventive care certain recommended preventive services immunizations and screenings will be covered with no cost-sharing requirement no lifetime maximums on health coverage no lifetime limits on the dollar value of those health benefits deemed to be essential by the Department of Health and Human Services no pre-existing condition exclusions for children if you have children under the age of 19 with pre-existing medical conditions their application for health insurance cannot be declined due to a pre-existing medical condition in some states a child may need to wait for the state’s open enrollment period before their application can be approved if you have questions that were not covered by this video please contact a licensed be health insurance agent at one eight hundred nine seven seven eight eight six zero

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