Think About It: Steps and costs of insuring health

By JP Krahel

You want to know how I plan my doctor visits? Every so often, my mom calls me and says, “You’re seeing the doctor two Saturdays from now.” Unfortunately, she sometimes calls me around 9 a.m., which means she’s lucky if she gets a noncommittal grunt in return. Now, since I’m going to be leaving Rider soon, I figure it’s high time I learned something about taking care of my own health, and that means a long and winding road around the subject matter of health insurance.

According to a study from the National Insurance Commissioners, more than one-third of people ages 18-25 are uninsured. It is certainly a frightening prospect to imagine the amount of paperwork involved in insuring oneself, and my goal, this week and next week, is to define some terms and procedures of which I was near-completely ignorant only a few weeks ago, and to help you get started on avoiding a catastrophe.

First, let’s get the jargon out of the way. Health insurance is a system in which you pay a certain amount of money (called a premium) every so often (usually monthly), to a provider. This is called a policy. If you fall ill, are injured, or require medical care for some other reason, and the type of illness you’re experiencing is covered under your policy, your provider will pay some or all of your medical bill.

If that sounds vague, it’s because there is such a tremendous variety of options within any given insurance framework. For example, your plan may include a co-pay, which means that every time you buy a service or product, you have to pay a certain amount. You may have a $10 co-pay on prescriptions, meaning that every time you go to pick up your $80 per bottle medicine, you pay $10 and your insurance pays the other $70.

There’s also a deductible, which means that you shoulder the first X number of dollars of medical expenses for the year. For example: you break your arm after tripping on a sidewalk, and you’ve got a $1,000 deductible. The X-rays, re-setting, cast and doctor’s visits cost a total of $2,500. You send the bills to the insurance company, and they’ll cut you a check for $1,500, the difference between the total bill and the deductible, or the amount you agreed to pay. Any other medical expenses, for anything from a routine checkup to open-heart surgery, will be covered by the provider in full, minus the co-pay. There are, of course, exclusions, which are expenses not covered. For instance, you may have a regular health insurance plan that doesn’t cover vision, in which case you’d have to pay for contact lenses and vision tests, unless you got separate insurance to cover your vision expenses.

There may also be a coverage limit, which is a ceiling on how much the insurer will pay out. If, for whatever reason, you need $5 million worth of surgery, and you’ve got a $4 million limit, you’re in about a million dollars’ worth of hot water. On the flip side is an out-of-pocket maximum, which defines the most you have to pay in any given year.

Next week, I plan to explore the insurance issue a bit further, illustrate the dangers of life without coverage and discuss the different avenues toward actually getting yourself insured.

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