Health Insurance Rates

Health Insurance Rates

Many people look at health insurance rates in the same way that they view rates for other types of insurance for cars /auto or home/renters insurance.

This is not surprisingly, because it is the basis on which most types of insurance work. However health insurance is different and it is important to understand this when working out the real cost of health insurance policy.

Most people are familiar with the idea of insurance.

If you own a home you want to insure it against such risks such as fire, burglary etc.

Both you and your insurance company pretty much work on the basis that for the majority of people these events are never going to happen, so you pay into a pool effectively that then pays out if and when these risks do actually affect an individual.

The amount you pay at a premium is what is known as a rate, which effectively is the probability of the event taking place, plus a loading for the costs/profit of the insurance company.

Therefore if the probability of an event happening is one in 100, then the rate you would pay would be 1% plus loading.

Health insurance is different in many many ways.

Firstly people know that they are going to need access to healthcare many times during their life, from birth through the death and many things in between. So the element of risk is not the same as in other types of insurance.

Health Insurance Rates

Health insurance rates to an extent are determined on probabilities, but there are so many other costs involved that this distorts the real cost to the consumer.

Firstly health insurance policies and health insurance rates are hugely affected by the nature of deductibles in health insurance policies.

Both insurance policies will carry one or several deductibles can relate to the individual themselves, their families and certain items such as prescription drugs.

There’s also the cost of co-insurance, a very different meaning in health insurance as opposed to other types of insurance.

Health insurance rating is affected by co-insurance, in that many insurance plans will have a coinsurance clause ranging from 60 to 90%. This means that that is the percentage insurance company will pay under the terms of the policy, after deductibles etc, the remaining percentage being the cost that the individual or family will have to bear.

This means that a family could easily have a high annual deductible on the policy relating to several different areas, and also have to pay 30 or 40% of the costs of any treatment even after the insurance company has paid their share.

Health insurance rates also affect usually by what are known as in network and out network physicians. Insurance companies negotiate special rates with physicians who then become part of their in network.

If you want to choose a physician who is not in their network, the insurance companies percentage that they will pay of the costs involved reduced significantly, normally down to about 50% of what they would pay for an in network physician.