In the health insurance industry, an administrative fee is what its name implies: an additional charge intended to cover administrative costs. It can be charged separately on a monthly basis, or as a one-time fee. However, it is often bundled into your health insurance plan premium.
Administration fees vary among health insurers, as well as depending on the type of plan you choose.
A premium is the monthly charge associated with any health insurance policy. In the vast majority of cases, it does not cover every single medical expense. If it did, the premium would be unacceptably high for most people.
The cost of your monthly premium currently depends on several factors:
Deductible:
In the health insurance industry, a deductible is the out-of-pocket amount that you must pay before your coverage kicks in. For example, with a $1,000 deductible for hospital visits, you’d be fully responsible for that amount, while your policy would pay a portion of any remaining cost.
Most deductibles are annual, meaning that the cap for out-of-pocket spending is per year. Health insurance plans with higher deductibles tend to have lower monthly premiums.
Mini medical health insurance plans (also known as mini-meds) are limited benefit plans. Similar to indemnity plans, they offer only bare-bones coverage levels.
The difference is that mini medicals pay health care providers a fixed amount specified in your contract. You will be responsible for paying the remainder to doctors, hospitals, etc.
These plans have very low premiums, and can be helpful if you can find low cost providers that accept them. On the other hand, mini-meds have been criticized for misleading advertising that implies that they offer full-fledged health insurance, which they do not.
Major medical health insurance is also known as a limited plan. It covers catastrophic illness and injuries, as opposed to preventative care. Deductibles are normally quite high, which means that monthly premiums are lower.
You will be responsible for the cost of preventative care services. If you prefer not to pay for prescriptions and doctor visits out-of-pocket, complementary comprehensive plans are also available.
These major medical plans are ideal health insurance solutions for the young and healthy (who are less likely to use regular medical care), as well as those who have tight budgets. Since major medical insurance covers surgeries, x-rays, intensive care, and hospitalizations, it can help prevent you from sinking into bankruptcy.
Limited indemnity health insurance covers the essentials: emergency treatment and hospitalization. Unlike other types of health insurance, there are no limitations on which doctors, specialists, or hospitals you can visit. The downside is that you will be responsible for a significant co-insurance percentage of those costs (after the deductible that must be paid up front before coverage kicks in), which tends to be high), and you will often need to file claims yourself.
It is far less comprehensive than major medical coverage. For example, preventative care services may not be included. However, it is far less expensive on a monthly basis, and will protect against financial hardship due to serious health issues. As a result, limited indemnity coverage is best for those who are healthy and relatively young, yet have a tight budget. Many student health insurance options are limited indemnity plans.
Co-payments are an important part of the cost of any health insurance plan. A co-payment is the fixed amount you will pay for a particular service.
Co-payments can be charged for the following:
These amounts can vary from as little as $5 or $10, to as much as $40. In most cases, a lower monthly premium comes with more expensive co-payments.
In addition, most co-payments only apply when you are in-network. If you choose to go outside of the provider network for health care, you may instead be responsible for a percentage of the bill.
