Insurance companies consider two things in determining rates: the applicant
and the benefits. The applicant's age, gender, smoking and health conditions
determine the probability of claims, while the deductible, co-pays,
co-insurance, PPO network and zip code determine what the benefits cost.
Age- It is a fact that age is the single biggest factor in determining
risk of health claims. Age increases the probability of claims.
Gender- Males under age 55 usually have lower claims than females of
the same age.
Smoking- Smoking tends to increase claims by causing respiratory
conditions as well as complicating other conditions.
Health- You do not have to be in perfect health to get insurance but
existing conditions could increase your rates.
Deductible- The higher your deductible the lower your rates. The
company pays less, so you save.
Co-pays- Many companies offer options like co-pays. While
wildly popular they increase your rates because they result in more claims.
Co-insurance- This is the part of your medical bills which are
shared between you and the company.
80/20 means; they pay 80% and you pay 20% of these bills. If the
co-insurance limit was $5,000 your share would be $1,000.
70/30 means; they pay 70% and you pay 30% of these bills. If the co-insurance
limit was $5,000 your share would be $1,500.
Out of Pocket- Another term for your share of the co-insurance.
PPO network- Preferred Provider Organizations are networks of
doctors and hospitals who have agreed to give a discount. You pay less for this
insurance. However, you pay more of the claim if you don't use the
PPO network. Usually the co-insurance for these policies is shown like this:
80/60. This means they pay 80% in network and only 60% outside it.
Zip code- This is used to determine which hospitals are likely to be
used. Some hospitals are less expensive than others.
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