Health Insurance isn’t cheap.
We all are well aware of that. That doesn’t make it any easier when we have to pay really high premiums for our health insurance. In case you didn’t know, a Health Insurance premium is what you pay for health insurance coverage every month. Whether it’s through an employer, Medicare, or a private insurance company, we all pay a premium for our health insurance. But what does your health insurance premiums actually cover? Your premiums cover the costs of the medications and care you receive. A portion of it is also used to improve health care quality and affordability for all Americans.
Let’s take a look at what is covered in your health insurance premium payment:
Prescription Drugs – This includes payments for outpatient prescription medications and those administered in an office or clinic.
Doctor Services – Payments for all non-drug related inpatient and outpatient services that are provided by a physician.
Office & Clinic Visits – Payments for all non-drug related outpatient services provided, not including doctor services.
Hospital Stays – Payments for all services provided during a hospital stay. This includes all prescription drugs received, but does not include the actual physicians.
Taxes – All taxes paid by the health plan. Good ol’ Uncle Sam always needs his cut.
Other Fees & Business Expenses – This includes things like broker commissions, licensing and fees, insurance premium rebates, and debt services.
Customer Engagement – This includes customer service, new product development, market research, marketing, and advertising.
Finance, Claims, & Special Investigations – This includes fraud and abuse monitoring and detection, benefit coordination, billing, processing payments, and even training and education.
Care Management – Payments to hire nurses and case managers, operate disease management, health coaching, behavioral health, community affairs, and wellness programs. It also includes reviewing medical quality and developing medical policy.
Technology & Analytics – Investments in cyber-security, programming, analytics, and data exchange to protect and improve patient care.
Administration – This includes human resources, legal, facilities, purchasing, compliance, executive offices, public policy, and communications.
Provider Management – Provider education, provider service calls and appeals, contracting, and credentialing.
It’s kind of mind boggling to see all the places that your Health Insurance premiums go to.
We know, we know, some of the things you’re paying for may not be top on your “money priority list” but here we are regardless. The good news is that through the Affordable Care Act, there is something called the Medical Loss Ratio (MLR) . The MLR prevents insurance companies from spending all of your hard earned money on administration costs and other routine business expenses. It also requires insurance companies to use 80 cents out of every premium dollar, from individual and small group customers, to pay customer claims and support activities that improve the quality of care. The kicker for you? The MLR requires insurance companies to issue rebates to enrollees if they do not meet minimum standards.
So even though you see a lot of administration-related information above, know that 80 cents out of every dollar is really used for you, the insured.
You may not like how you pay for insurance or maybe even the quality of care that you receive but at least now you know where your coins are going every month.Have health insurance related questions?