What does deductible and premium mean in insurance?

ANSWER: They define different types of costs for the consumer.*

Deductible: Acts like your pay ceiling. It is the amount you pay for covered health services before your health insurance/plan  begins to pay out. So if your deductible is $1,500 and your recent visit to the doctor costs you $2000, then your plan will pay $500 — if the service is covered. After meeting your deductible, there may still be copayments involved.

Premium:  This is basically your fixed “bill” to keep you enrolled in a plan. Specifically, it is the amount you must pay to your insurance plan. If you and your employer pay $450 every month to keep your covered under a health plan, your monthly premium is then $450. Your annual premium would then be $450 x 12 months, for an annual premium of $5,400.

Deductible’s Expanded:

There can be a lot of rules and stipulations when it comes to insurance  –especially with deductibles. Our recommendation is always play it safe, and ask about limits, maximum sums and individual vs family amounts. Insurance policies will likely have a maximum sum claimable section that you will want to keep an eye out for, along with a copayment system you’ll want to know as well.

More on Premiums:

Typically there aren’t many options to lower health premiums, but the US Government does allow for a Premium Tax Credit that depends on household size and income. You can read more details here, or see what HealthCare.gov recommends in the video below:

 

*This information is a guide only, it is not legal or financial advice. Always do due diligence to ensure you are not breaking the law.