How Health Insurance Works

When I consider purchasing an individual health insurance plan for myself or my family, do I have any financial obligations beyond the monthly premium and annual deductible?

Answers: It depends on the plan, but some plans have the following cost-sharing elements that you should be aware of.

Co-Payments: Some plans include a co-payment, which is typically a specific flat fee you pay for each medical service, such as $30 for an office visit. After the co-payment is made, the insurance company typically pays the remainder of the covered medical charges.

Deductibles: Some plans include a deductible, which typically refers to the amount of money you must pay each year before your health insurance plan starts to pay for covered medical expenses.

Coinsurance: Some plans include coinsurance. Coinsurance is a cost sharing requirement that makes you responsible for paying a certain percentage of any costs. The insurance company pays the remaining percentage of the covered medical expenses after your insurance deductible is met.

Out-of-pocket limit: Some plans include an out-of-pocket limit. Typically, the out-of-pocket limit is the maximum amount you will pay out of your own pocket for covered medical expenses in a given year. The out-of-pocket limit typically includes deductibles and coinsurance. But, out-of-pocket limits don't typically apply to co-payments.

Lifetime maximum: Most plans include a lifetime maximum. Typically the lifetime maximum is the amount your insurance plan will pay for covered medical expenses in the course of your lifetime.

Exclusions & Limitations: Most health insurance carriers disclose exclusions & limitations of their plans. It is always a good idea to know what benefits are limited and which services are excluded on your plan. You will be obligated to pay for 100% of services that are excluded on your policy.

Beginning September 23, 2010, the Patient Protection and Affordable Care Act (health care reform) begins to phase out annual dollar limits. Starting on September 23, 2012, annual limits on health insurance plans must be at least $2 million. 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 23, 2010 have what is called "grandfathered status." Health Insurance Plans with Grandfathered status are exempt from several changes required by health care reform including this phase out of annual limits on health coverage.

If you purchased your health insurance policy after March 23, 2010 and you're due for a routine preventive care screening like a mammogram or colonoscopy, you may be able to receive that preventive care screening without making a co-payment. You can talk to your insurer or your licensed eHealthInsurance agent if you need help determining whether or not you qualify for a screening without a co-payment.

There are five important changes that occurred with individual and family health insurance policies on September 23, 2010.

Those changes are:
1. Added protection from rate increases: Insurance companies will need to publically disclose any rate increases and provide justification before raising your monthly premiums.
2. Added protection from having insurance canceled: An insurance company cannot cancel your policy except in cases of intentional misrepresentations or fraud.
3. Coverage for preventive care: Certain recommended preventive services, immunizations, and screenings will be covered with no cost sharing requirement.
4. 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.
5. 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 will be approved.

Source: YouTube

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25 Responses

  1. John Butts says:

    When healthcare is placed under a capitalistic system its NOT healthcare.
    How noble insurance is supposed to work is a said group of people pay into
    a pool that will be deducted from to cover any members needs. If the pool
    is too low the premium goes up, if the pool is ample or even far above what
    a universal claim would even tap. Then there would be no premium until the
    pool is drawn to a certain amount. Its supposed to be an agreed trust for
    members. This example would be a non profit system. However, America
    uses a for profit insurance system. Its in the best interest of the
    insurance company to receive the highest premium possible and pay out as
    little as possible. In the insurance industry bonuses are granted to
    employees that excel at refusing claims. This system is inherently
    against the benefit of the clients. Its an evil industry that should be
    met with hostility because so many lives have been lost in exchange for
    profits. Id also like to point out that insurance companies receive
    subsidies from you (the tax payer) to offset their costs. So you pay taxes
    and a premium for care that you will never receive or at very high cost.
    Yet it baffles me that everyone is totally cool with this assbackwards
    system. Would you not rather just pay higher taxes, ( which could be
    cheaper when including premiums ) to have EVERYTHING covered 100 percent?
    That way you can focus on healing and recovering to return to a productive
    citizen. For profit Health insurance companies are evil. The rest of the
    devolved world has given us plenty of templates for much better systems to
    choose from, yet we are bound and determined to ensure that life only goes
    to those that can pay cash for it.

  2. Here’s a video from our website you let you know how health insurance
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  3. Paul Parmar says:

    This video is really helpful to provide the brief about heath #insurance.
    Thank you for sharing this.

  4. what a joy living in the amazing and great country USA!!!!! everybody has
    the freedom to be broke!!!

  5. Ha! your doctors charge you for a brief visit!? Good luck getting that life
    saving yet retardedly simple checkup that will save your ass from cancer
    after spending all cash on stuff you actually need.

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  7. Fahad Ashraf says:

    Learned a lot of basics through this video, thank you!

  8. Thanks alot helped u helped me with homework this weekend

  9. This was really helpful!

  10. expence is a typo. it should be expense.

  11. simo lhwari says:

    this is a great video

  12. Jax Kat says:

    Health insurance is now marketed like auto insurance..violating the law by
    using the term “you must buy”..following this logic will cause to likely go

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  14. dlucas90 says:

    Socialism = the pooling of money to pay for goods and services
    Insurance = the pooling of money to pay for goods and services.
    This is your economy on drugs.

  15. toomanybytes says:

    “More funds will strengthen the hold of the health industry over public
    resources and heighten its prestige and arbitrary power. Such power in the
    hands of a minority will produce only an increase in suffering and a
    decrease in personal self-reliance. More money will be invested in tools
    that only postpone unavoidable death and in services that abridge even
    further the civil rights of those who want to heal each other.” – Ivan

  16. Edwin T. says:

    Was on the affordable health care site and was totally confused. Read a
    couple of websites explaining how it works, and it helped some, but was
    still confused about a few things. But after watching this, it helped me
    finally understand it 100% (I guess it has to do with the simple video
    which explains visually )

  17. Get your frustrations out. And
    tell the world what you think.

  18. Mahmudul Huq says:

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  19. SolutionOne says:

    How health insurance works?

  20. Md Mahin says:

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  21. Great video on how Health Insurance Works.

  22. Amaru Cohen says:

    *To know how life works, check out*

  23. Lennybird91 says:

    Be wary of where you receive your facts. Every other OECD nation would beg
    to differ on just how effective single payer (or public option with a
    mandate) is. They blow us away in nearly every statistic. Diet and exercise
    are crucial, but modern-medicine is leagues beyond popping vitamins and
    hoping you can cure your cancer.

  24. TheVideo5094 says:

    A Hybrid Healthcare system. It has its perks, but massive draw backs.