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Employment-based coverage is still the most prominent form of health insurance in the United States; however, the rate of this coverage has fallen in every year since 2000. Due to the high cost of health insurance, many employers are scaling back their insurance or eliminating it altogether according to a survey by the non partisan Kaiser Family Foundation. This leaves many individuals to make their own health care insurance decisions.

First, what is health insurance? It is a form of group insurance where policyholders share the risk. Everyone doesn’t get sick at the same time, so most of the premiums go to paying the premiums of those who are sick.

The best time to shop for health insurance is not when you’re experiencing an emergency. A little preparation, will help you make a better choice about the best health insurance plan for you.

Useful Terms:

Copayment
The copayment is the amount that the policy holder must pay for a doctor’s visit or other service. For instance, a policy holder may have to pay a $10 co-pay for each doctor visit.

Coinsurance
Coinsurance is similar to a copayment, except this is a “percentage” the policy holder must pay for a service. A customer may have to pay 20% of the cost of surgery.

Coverage Limits
The coverage limit is the maximum an insurance company will pay for a procedure. For instance, if an insurance company only will pay a maximum $100,000 for heart surgery, but the hospital charges $120,000, the policy holder will have to pay the extra $20,000.

Deductible
The deductible is the amount the policy holder has to pay out-of-pocket before the health plan kicks in and pays. If a policy holder has a $1,000 deductible, he or she must pay the first one thousand dollars. The expenses may include doctor’s visits, medication, hospitalization etc.

Exclusions
The insurance company may exclude certain procedures or drugs. They may exclude experimental options.

Maximum annual or Lifetime Coverage
The lifetime coverage is the maximum an insurance company will pay out in total over your lifetime. There may be yearly caps as well.

Out-of-Pocket Maximums
The out of pocket maximum is where the member’s payment obligation ends. The health insurance company may pay all of the costs after this level is reached. For instance, some insurance policies will pay for every prescription drug after the $500 yearly threshold is reached.

Premium
A premium is the amount of money the policy holder pays each month for their coverage.

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