If you are getting great benefits for the smaller bills...believe me...you are PAYING FOR IT. It's the equivalent to buying a car warranty that also covers a weekly car-wash, oil change every 3,000 miles, and a new set of tires every two years....sounds great but the cost would be so high...no one could afford it!! Health insurance is very similar...

A simple example (real life) will help explain this.

Let's say you have a PPO High-deductible at $47/month that mainly covers the big bills...any small stuff will be your responsibility. Compare that to a 30% PPO plan for $167/month that will cover right away...leaving you to pay 30%. That means your doctor visit is going to be pretty cheap. Remember, it will handle the big bills pretty much the same.

Now the first reaction to our $47 plan is..."You mean I HAVE to pay for the doctor visits and anything else up to $2,250??? That doesn't sound too good!!"

But let's look at it more closely...The difference in premium is $120/month. That's $1,440 a year. That's a lot of small bills you better be having in order to get any value out of the more expensive plan. So you're paying a definite $1,440 to cover a potential $2,250 expense. That's not smart insurance. You want to pay pennies on the dollar...i.e. protect with $47/month from a potential $20,000 surgery bill.

3. The real reason to buy California health insurance...The "Big What-if"

I hear it almost daily..."I'm healthy - what do I need health insurance for??"

The average person lands in the hospital every seven years. Almost 50% of bankruptcies in the U.S. are the result of a sudden medical condition or accident...and believe me...they were all probably "healthy".

There is a double-edged sword in today's medical world. Improvement in medical technology and capability is unprecedented with even further developments around the corner through new genetic advancements. All this is great but as the capabilities increase so do the resulting costs. The possibility for the large medical bill is really why you need health insurance and this should be ultimately what your plan protects against.

Maximum out of Pocket

Most plans handle this Big What-if or catastrophic health coverage with a "maximum out-of-pocket", quite possibly the most important part of your medical plan.

It basically means, if you have a big bill (or a series of bills) when does the plan pay at 100%. Of course, this maximum applies to in-network (see Section 1 Doctor doctor) and for covered benefits. It usually applies to a calendar year, from January to December after which it is reset. Typically, the Maximum includes deductible (we'll talk about the deductible in the next section - small bills).

4. Pennies on the nickel?? Insight into how insurance plans handle the smaller bills.

Now small bills basically refers to everything up to your maximum-out-of-pocket (see Section 3 - Big Bills). There are different ways each plan handles these expenses so lets explore them and more importantly...their costs to you.

Up to your maximum, each plan handles smaller bills in one of three ways. By small bills, we mean everything from your doctor visit charge to minor surgery...essentially what falls below your maximum (because it goes 100% after that anyway!!). Let's first understand what these terms are, and then really understand how much it costs to have the bells and whistles.

Deductibles, Copays, Co-insurance.

A deductible is an amount that you will pay 100% of before the plan starts to pay. Think of if as a pool of money. Once you have spent your pool of money out of your pocket, the insurance then starts to kick in. This amount is usually in a calendar year, January-December. Sometimes there are separate deductibles for specific care such as maternity. Now remember, if you are in-network i.e. you are Blue Cross and the doctor is a Blue Cross doctor, then you will get 30-60% off because of the negotiated rates. Let's look at an example...

Doctor visit is $100. Because you are Blue Cross PPO and doctor is Blue Cross PPO, then this charge may drop to $60. You pay this $60 and it applies to your deductible.

This negotiated rate is a great benefit even before you have met your total deductible. Now out in the market today, they primarily have what's called a high deductible plan (from around $1,000 to $3,000) which is for the person who is really worried about the big what-if and wants to keep their monthly premiums down. A great example of this is the Health Savings Account plan which has special tax advantages for the self-employed and small group.

A Copay is simply an amount you pay for a given service. For example, a $40 copay usually means you will pay $40 for the doctor consultation. Keep in mind that additional services, i.e. labs, x-rays, etc...will have additional costs. Sometimes there are copays on specific services. For example, ambulance or emergency room visit might have a copay.

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