Q: What Is a Health Insurance Premium?
Asked by Anonymous on October 13, 2017
The amount you pay each month for your health insurance plan is called your “premium”. Think of this as a monthly subscription fee. You’ll only hear this term used to refer to your monthly bill. Depending on how comprehensive your health insurance plan is, and how much your insurance company contributes to your care – per the type of plan you’ve chosen– your health insurance premium could be higher or lower. For example, a bronze-level HMO plan will have a lower monthly premium compared to a gold-level PPO plan.
Why do insurance plans use the word “premium” instead of “cost”? The true answer is probably lost to history, but the word premium has been used at least since insurance became commonplace in the 18th century. The word premium may be derived from Latin, in which it is roughly translated as “to pay before” something occurs.
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