What does the term "premium" refer to in health insurance?

The term "premium" in health insurance specifically refers to the amount that an individual or a group pays to an insurance company for health coverage, typically on a monthly basis. This payment is essential to maintain the insurance policy and ensure that the insured has access to the benefits outlined in their plan. The premium is distinct from other costs associated with health care, such as out-of-pocket expenses, deductibles, or the scope of coverage offered by the insurance plan.

Out-of-pocket costs related to doctor visits represent additional expenses, such as copayments or coinsurance, that a policyholder may incur when receiving medical services. The amount of coverage provided by a plan is determined by the policy’s terms and conditions, specifying what services and treatments are covered and to what extent. The deductible amount is the specified sum that must be paid out of pocket before the insurance begins to contribute to your health care costs.

Understanding the concept of the premium is vital for anyone navigating health insurance, as it is a recurring cost that plays a significant role in overall health care budgeting.