Health Insurance and Health Care: Overview, Roles & Regulations

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  • 0:02 Insuring Your Safety
  • 0:27 Health Insurance & Premiums
  • 1:26 Deductible, Coinsurance, Copay
  • 4:42 Fixed Indemnity & Exclusions
  • 5:37 Lesson Summary
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Lesson Transcript
Instructor: Artem Cheprasov

Artem has a doctor of veterinary medicine degree.

This lesson will explain the major aspects of health insurance and its role in your health care costs. We will discuss premiums, deductibles, coinsurance, copays, and more!

Insuring Your Safety

Cars, homes, health - all of those and many more can be insured. Cars come and go, homes are always being built, but once you've become an adult, your health is almost entirely deteriorating. So, it's pretty important to make sure that you insure yourself, your health, for the absolutely inevitable problems that will occur to it.

Health Insurance and Premiums

Health insurance is a financial agreement for the payment of health-related costs made between an individual, such as yourself, or group of individuals and an insurance company. A person pays a premium for their health insurance. This is an amount that needs to be paid every set period of time to an insurance company in order to receive specific benefits. Some premiums are less than $100 a month and others can be well over $1,000 a month.

A premium is sort of like having to pay a monthly fee for cell phone service; if you don't pay up, you won't be able to make or receive calls. But just because you have health insurance and always pay your premium on time that does not mean that your insurance policy covers every aspect of your health care, nor does it mean that you will have no other out of pocket expenses for your health care costs. You'll see what I mean once we finish up this lesson.

Deductible, Coinsurance, Copay

In your agreement with your health insurance company, there are different roles and regulations that govern your use of the policy and covered costs. For instance, there is something called a deductible. This is an amount of money you must pay for health care services covered under your plan before the insurance company begins to pay for these services, meaning if your deductible is set at, say, $1500, then your insurance company doesn't pay anything for you until you pay the first $1500 for health care services that are actually subject to the deductible.

This is kind of like telling someone that you'll help them buy a car, so long as they pay a certain amount for it themselves prior to you even beginning to chip in. The deductible doesn't always apply to all services under your plan so you must read the terms of your contract very carefully. While you must pay your premium on a regular basis to be covered by health insurance, a deductible (or even any part of it) does not have to be paid at all until you actually use a health care service.

Another important concept related to your health care you must understand is coinsurance. Coinsurance is the percent share of the costs of a covered health care service that you are responsible for. This coinsurance kicks in only once you have already paid out all, that is to say 100%, of your deductible for the year. So, let's just say that in addition to your mandatory monthly premium, you've already paid out 100% of your deductible for covered health care costs and services you have used during the year.

Then, for some reason, you have to go to the doctor again where the doctor performs a $1,000 procedure covered under your plan. If your coinsurance is 20%, then your out of pocket costs for that procedure will be $200, which is 20% of $1,000. The rest (80%) of the bill will be paid to your doctor by the health insurance company.

Coinsurance should not be confused with a copay. A copay is a fixed amount, usually small, which you pay towards a service at the time of service. For example, when you go to the doctor you usually pay a certain amount right as you go to visit the doctor. A copay is a separate charge, one that's not part of the monthly premium, deductible, or coinsurance. It's sort of like having to pay at the entrance of a movie theater for a ticket to get in and see the show.

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