Cheap health insurance FAQ

 

There's probably not much more confusing than trying to make sense out of the information provided when shopping for cheap health insurance. This article will explain some basic insurance terms in an effort to both help you understand what you're looking at, and help you think about what you should be looking for.

Fee-for-service

Most health insurance plans operate according to a system called fee-for-service. In this type of plan, the policyholder pays a monthly fee, which is called a premium. The provider then pays for medical expenses, either completely or just a portion, depending on the policy.

Deductibles

Before insurance benefits begin paying for expenses, the policyholder must pay a certain amount out-of-pocket. This amount is called a deductible, and can vary widely among providers. Typically, a higher deductible will result in the low premiums associated with cheap health insurance, while lower deductibles raise the monthly premiums.

Co-Pay

Some cheap health insurance plans are able to keep rates low by requiring a co-pay. This is an amount paid up front at the time of an office visit. It may also be required for prescriptions and other services. The co-pay is usually pretty minimal; some insurance companies count this amount toward your deductible, while others do not. However, like the deductible, choosing a higher co-pay can result in lower monthly premiums.

Co-Insurance

This is the amount that you are responsible for paying which is not covered by your insurance company. For example, your insurance company may cover 80 percent of the costs associated with a particular medical treatment, leaving you to pay for the remaining 20 percent. Any money you pay as part of your coinsurance is counted toward your deductible.

Caps and Limitations

A cap, also called a limit, is a set dollar amount that is paid out by your insurance provider. Some insurance providers have a maximum amount they will not pay beyond. This may be a number that resets back down to zero at the end of every calendar year, or it may be a lifetime limit.

Putting it all together

Every individual has different insurance needs, so it's impossible to give just one recommendation about which system will work best for everyone. Some policyholders may prefer a low monthly premium and would rather pay a higher deductible if anything does go wrong. Others may choose to pay more per month in exchange for less out-of-pocket responsibility in time of crisis. Ideally, you should be able to combine cheap health insurance with the amount of coverage that works best for your health care needs, and find the perfect balance for you.

 
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