Investment Banking

Three key jargon and personal recommendation for Health Insurance Plan

Premium:   This is what you pay to insurance company to continue your policy. Refer to websites who provide comparison between company, premiums and policies. Also consider company’s reputation before choosing lowest premium.

Deductible: This is the fixed amount you pay to hospital in case of contingency. Example, your hospital bill is $10,000 and deductible is $2,000, then you pay $2,000 and insurance company will pay rest if co-pay is 0%.

Co-pay (Out of pocket): This is the percentage amount you pay to hospital beyond deductible on your bills. Example, bill is $10,000, deductible is per-decided in policy itself is $2,000and co-pay in policy is 10% then you’ll pay to hospital $2,000(deductible)+ $800 (10% of remaining bill) =$2,800. Remaining amount insurance company would pay.

 

If you read How to choose Health Insurance Plan? Then here are my recommendations.

  1. Set aside deductible in your saving/current account at the start of the year.
  2. Also, additionally set aside at least 20%of your yearly earnings for contingency.
  3. Remember, if you choose a plan where there is no deductible and no co-pay then premium will rise. I would avoid that based on my thumb rules.
  4. Remember that if you make a claim, next year your premium may rise.

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