Is there such a thing as cheap health insurance? It hardly seems possible when you look at the rise in hospital costs and physician services.
Insurance companies have the task of underwriting the medical risk for insurance. The insurer then issues and delivers the policy to the insured once they are accepted into the plan. The policyholders then receive the policy declaration pages that list all of the benefits and features.
What are those benefits and features? How do they work after a hospital stay?
When you begin to find the answers to those questions then you begin to understand what makes up the total premium. When you receive your first benefit statement after a hospital stay then you will begin to understand how the deductible is applied and how the coinsurance works.
Simple claims analysis
- Total inpatient expense for 4 days in the hospital including physician services amounts to $4000.
- Your policy has a $500 deductible with an 80/20 coinsurance clause with a maximum out of pocket $2000.
- You must pay the first $500 for your stay leaving a balance of $3500.
- You will pay 20% of that $3500 or $700 and the insurance company will pay $2800.
When your 20% reaches $2000 then the insurance company pays 100% of the remaining costs up to a million dollars (or 2 million etc).
The health insurance buying trends indicate that people are purchasing health insurance with higher deductibles. Deductibles bring down the premium dramatically.
There are some plans with deductibles as high as $5000. This is called self-insuring because in essence that is what you are doing for the deductible amount.
Health Savings Accounts are also starting to become very popular. These savings accounts are tax deductible. They are like medical IRAs. Contact your tax advisor or accountant for more details.
Please see our recommended source for insurance quotes. We have done the research so you don’t have to.
The American Opportunity Tax Credit (AOTC) is a valuable tax benefit for young adults pursuing higher education. The credit can be worth up to $2,500 per eligible student for the first four years of post-secondary education. If you’re currently in college or planning to go back to school, it’s important to understand how the AOTC…
As a young adult, you may be just starting out in the workforce and learning the ins and outs of taxes for the first time. Preparing for taxes can seem daunting, but it doesn’t have to be. With a little bit of planning and knowledge, you can make sure you’re taking advantage of all the…
There are several advantages to establishing a limited liability company and many of these compensations revolve around the tax advantages. A limited liability company if often sought as a third alternative to forming a corporation or a partnership. Many corporations are formed because they offer attractive limits on the personal liability that the business may…