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Premium Vs. Deductible - Understanding Health Insurance Costs

Lewis Mark Published: October 11, 2018 Updated: November 13, 2018

Weighing money time

There are few things in life more frustrating than trying to understand all the terminology and costs associated with your health insurance plan. Even when you understand the terms, do you know how they work together? If you feel this way, you’re definitely not alone. When it comes to your health insurance, two of the most expensive parts are your premiums and deductibles, so here’s how they work.

Premium Vs. Deductible

Premiums and deductibles are one of the major concerns when signing up for health insurance. A premium is the amount you pay each month to stay covered, and [https://www.firstquotehealth.com/health-insurance-news/what-is-a-deductible) of money you have to pay before certain services are covered by your insurance.

When it comes to premiums versus deductibles their relation comes down to how much you want to pay out of your own pocket. With health insurance, you either pay now, or you pay later. If you add up the deductible versus the premiums they level out for the whole year.

How It Works

Say for example you have two plans to choose from, one that has premiums of $55 a month and deductibles of $4,500, and the other that is $200 with a $3000 deductible. The more you pay for premiums, the less you pay for your deductibles. If you need insurance and cannot pay a lot of money for it on a monthly basis, then you may want to go with a plan that has higher deductibles and use the plan as you would a catastrophic or emergency insurance plan.

Do Premiums Count Towards Your Deductible?

The short answer to that question is no. The premiums dictate how much your out-of-pocket expenses will be. They never count towards your annual deductibles.

What Costs Do Count?

Your copays and coinsurance count towards the plans health and pharmacy deductibles. This is anything else that you pay, other than your monthly premiums. These are the costs related to prescriptions, lab work, doctors visits, physio, mental health treatment, substance abuse recovery, surgery and any other procedure or service covered by the plan that you had to pay out of pocket in order for the medical provider to render these services to you.

Should You Opt For Higher Premiums Or Deductibles?

To answer that question, you have to look at how you will use your insurance. Are you an ill person, or someone with a pre-existing condition who needs to see a doctor weekly. If you answered yes to that, then you want a higher premium to give you lower deductibles. If you are fit healthy and avoid the doctor at all costs, then you want a plan with lower a premium and higher deductibles. Assess your needs, before making a purchase.

Explore Your Options With FirstQuote Health

The bottom line is this, if you have health insurance, you will pay for your care in one way or another. There are very few occasions where one might receive free healthcare, so it is important that you make the right financial choice for the long run. If you are ready to take the plunge, and purchase some health insurance, then FirstQuote Health is a great place to start.

FirstQuote Health takes the pain and hassle out of shopping around for health insurance plans by letting you compare quotes in your area side by side. To get started, enter your zip code, and get coverage for you and your family as quickly as today.