All the talk about varying health care rates and deductibles can make anyone’s head spin.
Rates and deductibles are completely independent of each other, but they do work in tandem to provide you with the best health care at a cost you can afford.
Also known as the premium, rates are what an individual pays per month for a health care plan. Rates can vary depending on the type of coverage you are looking for, the health insurance company you are shopping with, and even on your health; if a health exam and survey are done before getting a proper quote.
Depending on whether you plan to add dental, life, prescription or any combination of extras offered, your monthly rate will increase. There are ways to help decrease your rate, such as staying in good health and shopping around for plan quotes from different providers. Rates can vary from provider to provider with the higher rates usually set by companies that do not require any pre-insurance exams or surveys.
Deductibles are what you pay out of your pocket before an insurance company will start providing any support for your claims. Deductibles have wide varying degrees, anywhere from a couple hundred to a few thousand dollars.
The purpose of the deductible, as well as the co-pay, is to keep the insurance system in balance by preventing people from seeking medical attention for every sneeze and sniffle they have. By requiring a deductible, the insurance companies can help offset the cost of the procedures for the health care provider and deter people from trying to abuse the system.
Now that you have an idea of how rates and deductibles differ, let’s take a look at how they work together to provide you with the best possible plan that still fits within your budget.
Rates and deductibles basically balance each other out; if the rates are high, the deductible is lower and vice versa. Here is where your decision comes into play. If you expect to incur a lot of medical expenses, it is typically best to keep your rates high and your deductibles low. For this reason, you will pay a higher monthly payment, but your initial investment in your health care will be considerably less.
On the other hand, if you take care of your body, and don’t plan to max out your insurance, a high deductible will keep your rates reasonable. This option will provide the health insurance if needed in a dire medical emergency, but lets the insurance company know that they should not plan on paying out large sums of money for your coverage.
These two options are examples of how the insurance companies keep everyone in check. The people with the higher need for care, pay more in to the system at the get go and therefore do not need to pay so much out of pocket for their service. In other cases, the individuals who do not rely heavily on the insurance can still have it in case of emergency, but will pay for the services more if it is needed.
Get quotes both ways from your insurance provider and ponder your current health before deciding which route to take. If you have further questions, do not be afraid to ask, as most insurance companies will be more than happy to set your mind at ease.
Return to the Table of Contents for the Choosing Health Care series