Employee Benefits Health

Insurance Benefits - What is a Premium?

Wells Insurance

Certain insurance terms get thrown around not everyone always understands all of the intricacies surrounding them or how they work. You may know what it is but have questions about how your health insurance premium works. Your premium is the amount you pay for health insurance each month. Unlike other health insurance costs, you continue to pay your premium even after you’ve reached your deductible. Understanding your health insurance premium can help you manage your health care costs and plan your annual budget. This article provides an overview of health insurance premiums.

Overview of Premiums

A health insurance premium is the amount you must pay to keep your health insurance policy active. In return for your premium payment, your health plan covers a portion of your health care expenses, as outlined in your health insurance policy, shielding you from the financial strain of costly medical expenses. If you stop paying your health insurance premium, your health insurance could lapse, causing you to go without coverage for months until your next opportunity to enroll. Premium payments are typically paid weekly, biweekly or monthly. If your employer provides health insurance, your premiums will typically be taken directly out of your paycheck. For example, $100 may be deducted from each paycheck to pay your health insurance premium. Alternatively, if you’ve purchased health insurance individually, you will be responsible for arranging these payments yourself.

Factors That Affect Your Premium

The cost of your health insurance premium will vary with numerous factors, including the following:

  • Your age and gender
  • Your medical history
  • The number of dependents on your plan
  • Your location
  • Your coverage type and amounts
  • Your deducible, copayments and coinsurance

Although it may be tempting to select the health care plan with the lowest premiums, it’s important to remember that health insurance plans with higher premiums typically have lower out-of-pocket expenses and deductibles. As such, if you expect to have high medical expenses for the year, it could be more cost-effective to choose a health care plan that has higher monthly premiums and fewer out-of-pocket expenses.

Conclusion

Health insurance is a vital component of modern health care, providing individuals and families with financial protection against the high costs of medical treatment. Understanding how your health insurance works can significantly impact your financial stability and help you manage your medical expenses.

Contact your employer today for more information or reach out to our knowledgeable Employee Benefits staff to learn more. 910-762-8551 Insurance@wellsins.com