Understanding Health Insurance
Most Americans do not understand health insurance. Yes, they know it’s about your health, but the details escape most people. This blog will explain the differences and how they all work together.
Health insurance has many components, like deductibles, maximum out of pocket, copays, % of bill, assignment of benefits and contracted rates.
Deductible-the amount of money you must pay before the insurance pays anything.
Maximum out of pocket-the most you will pay in a calendar year. Usually, it’s twice the deductible amount.
Copays-the fixed or % cost of services, like a $50 copay for a doctor visit.
% of bill-instead of a fixed dollar amount, you pay a % like 30% of the contracted rate.
Assignment of benefits: when the patient signs an assignment of benefit form, two things happen: 1. The doctor can bill the insurance company directly and 2. The doctor must write off the amount the insurance doesn’t pay.
Contracted rate-this is the amount the insurance pays the doctor or hospital or any vendor. Consider retail versus wholesale. The retail rate is what the doctor or facility charges while the wholesale rate is what the insurance company pays.
Consider a $5,000 deductible with a $10,000 individual max out of pocket and a $10,000 deductible for the remainder of the family and a $20,000 family max out of pocket. Assume there are 4 family members. One person must reach the individual deductible, and the remainder of the family collectively reach the family deductible.
Since Obamacare, the deductible, max out of pocket and all other charges have increased significantly. With more people seeking coverage because they have insurance, and the doctor population not growing in consort with the patient need, pricing has increased significantly. Prior to Obamacare, a male under 30 could get a $1000 deductible with a $3000 maximum out of pocket plan for about $80.00 per month. Today, neither the plan or pricing
exist. Plans today start at around $400 for a $5000 deductible, $10,000 maximum out of pocket type plan. Also, plans now show deductibles and max out of pocket in plan types.
● Bronze plans are split 70/30 and have the highest deductible and max out of pocket and the lowest premiums.
● Silver plans are split 80/20 split and have the 2nd highest deductibles and max out of pocket and the 2nd lowest premiums.
● Gold plans are split 90/10 and have the highest premiums with the lowest deductible and max out of pocket.
● Platinum plans were available but proved to be too costly so in Nevada, platinum plans no longer exist.
The higher percentage is what the insurance pays and the lower amount is what the patient pays.
I usually recommend my clients take the highest deductible and max out of pocket with the lowest monthly premiums. The reason is simple; you will never reach your deductible much less than the max unless you are hospitalized. So why pay higher premiums which you may never use. Getting lower doctor visit costs does not make sense if you go only twice a year. Pay the lower monthly premiums with higher doctor visit costs and save considerable money in doing so.
As mentioned above insurance is complicated, so use a broker trained ion insurance. We cannot charge you for our services as the insurance company pays us directly. If you go directly to the insurance company, you will not pay less for the insurance. What you have done is eliminate choice as all carriers offer different plans with different pricing. Each insurance company has a list of their doctors and medications they offer and that needs to be considered as part of your choice of carriers.
Choose wisely and avoid potential issues.
I hope this information is useful and if anyone has questions, please contact me via phone or email and I will respond quickly.
Also, take a look at Medicare 2025 Information.
The Barend Agency Inc.
Len Barend, Broker
Cell:702-250-2200