Understanding Health Insurance Premiums: What They Are and Where Your Money Goes
Understanding Health Insurance Premiums: What They Are and Where Your Money Goes
Understanding health insurance premiums can feel overwhelming, especially with all the terminology and costs involved. At Sensenbrenner Primary Care, we want to help patients better understand their health insurance so they can make informed decisions about their healthcare.
Simply put, a health insurance premium is the amount you pay usually monthly to maintain active health insurance coverage, whether or not you use medical services during that month.
Where Do Your Health Insurance Premium Dollars Go?
So, where does that money actually go?
Health insurance premiums help insurers pay for the healthcare services used by members. According to information published by Blue Cross and Blue Shield of North Carolina, a significant portion of premium dollars goes toward paying for members’ medical care.
Those healthcare expenses can include:
Professional services: Care provided by primary care providers, specialists, telehealth providers and mental health professionals.
- Outpatient services: Healthcare that does not require an overnight hospital stay, including imaging, physical therapy, urgent care and certain same-day procedures.
- Prescription medications: Pharmacy expenses, including many prescription medications and specialty drugs.
- Inpatient services: Hospital stays, surgeries and other treatments requiring inpatient care.
A portion of health insurance premiums also supports the administrative and operational expenses required to manage a health plan, including claims processing, customer service and technology.
Health Insurance Premiums vs. Deductibles, Copays and Coinsurance
Your premium isn’t the only healthcare expense you may encounter.
Understanding the difference between a premium, deductible, copay and coinsurance can make it easier to understand what you may be responsible for paying.
Premium: The amount you regularly pay to keep your health insurance coverage active.
Deductible: The amount you may need to pay for covered healthcare services before your insurance plan begins paying its share.
Copay: A fixed amount you may pay for a covered healthcare service, such as a primary care office visit.
Coinsurance: The percentage of a covered healthcare expense you may be responsible for paying after meeting your deductible.
The exact amounts and requirements vary by insurance plan, so it’s important to understand your individual benefits.
Why Understanding Your Health Insurance Costs Matters
Knowing how your health insurance works can help you better anticipate healthcare expenses, understand your benefits and make more informed decisions when you need care.
At Sensenbrenner Primary Care, we encourage patients to understand their insurance benefits, including coverage requirements, deductibles, copayments and coinsurance.
For information about insurance participation and office policies, visit our Policies & Insurance page.
Frequently Asked Questions About Health Insurance Premiums
What is a health insurance premium?
A health insurance premium is the amount you pay, typically each month, to maintain your health insurance coverage. Premiums are generally required whether or not you receive healthcare services during that month.
Is a health insurance premium the same as a deductible?
No. Your premium is the amount you pay to maintain your insurance coverage. A deductible is the amount you may need to pay toward covered healthcare services before your insurance begins paying its share.
What’s the difference between a copay and coinsurance?
A copay is typically a fixed dollar amount you pay for a covered healthcare service. Coinsurance is generally a percentage of the cost of a covered service that you are responsible for paying. Your specific costs depend on your health insurance plan.
Do I still pay my health insurance premium if I don’t go to the doctor?
Generally, yes. Your premium maintains your health insurance coverage and is typically due regardless of whether you receive healthcare services during that month.
Where can Sensenbrenner Primary Care patients find insurance information?
Patients can review Sensenbrenner Primary Care’s Policies & Insurance information for details about participating insurance plans, patient responsibilities, self-pay policies and other insurance-related information. For questions about specific benefits or coverage, patients should also contact their insurance provider.
