All About Health Insurance Premiums: What They Are and Where Your Dollars Go
Understanding health insurance premiums can feel overwhelming, especially with all the terminology and costs involved. At Sensenbrenner Primary Care, we want to help you feel confident navigating insurance so you can make informed decisions about your healthcare. Simply put, a health insurance premium is the amount you pay—usually monthly—to maintain active coverage, whether or not you use medical services in that period.
But where do those premium dollars actually go? Transparency from insurers like Blue Cross and Blue Shield of North Carolina gives us a helpful look at how premium funds are typically allocated. According to Blue Cross NC, a large portion—about 87 cents of every premium dollar—goes toward paying for members’ medical care. This includes costs for doctor visits, outpatient services (like imaging or physical therapy), pharmacy costs (prescription medications), and inpatient care such as hospital stays.
Breaking it down further:
Professional services cover care from your primary care provider, specialists, telehealth appointments, and mental health counseling.
Outpatient services include treatments that don’t require an overnight hospital stay, such as same-day procedures or urgent care visits.
Pharmacy costs help cover prescription medications and specialty drugs you may need.
Inpatient services support overnight hospital care, surgeries, and more intensive treatments.
The remaining portion of your premium typically goes toward administrative and operational costs, such as customer service support, claims processing, and technology systems that help the health plan run smoothly.
It’s also important to remember that premiums are not the only cost associated with health insurance. Other out-of-pocket expenses—like deductibles, copayments, and coinsurance—come into play when you receive care, and they work differently from premiums. Premiums keep your coverage active, while cost-sharing pays for care when you need services.
Knowing where your premium dollars go—and how they support your access to care—can help you feel more confident about your plan and how it works. If you have questions about your specific coverage or how costs apply to services at Sensenbrenner Primary Care, we’re always happy to help answer them.
