What is an insurance premium?

Prepare for the Business of Healthcare and Health Policy Test. Study with multiple choice questions and explanations to ace your exam!

Multiple Choice

What is an insurance premium?

An insurance premium is the amount you pay to keep your health insurance policy active. It’s typically paid monthly (though some plans bill quarterly or annually) and is separate from the costs you incur when you actually receive care. The premium ensures you have access to the plan’s benefits, regardless of how often you use healthcare services in a given period. This is different from the deductible, which is the amount you must pay out of pocket before the insurer starts paying according to your plan; from the amount you pay at the time of a visit, which is a copayment; and from the portion of costs you cover after the deductible is met, which is coinsurance. For example, you might pay a monthly premium of $400 to maintain coverage, while still paying a $25 copay for a doctor visit and 20% coinsurance after meeting your deductible.

An insurance premium is the amount you pay to keep your health insurance policy active. It’s typically paid monthly (though some plans bill quarterly or annually) and is separate from the costs you incur when you actually receive care. The premium ensures you have access to the plan’s benefits, regardless of how often you use healthcare services in a given period.

This is different from the deductible, which is the amount you must pay out of pocket before the insurer starts paying according to your plan; from the amount you pay at the time of a visit, which is a copayment; and from the portion of costs you cover after the deductible is met, which is coinsurance. For example, you might pay a monthly premium of $400 to maintain coverage, while still paying a $25 copay for a doctor visit and 20% coinsurance after meeting your deductible.

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