Define Health Insurance Premiums

Health insurance provides protection against financial loss or strain due to illness or injury; it typically covers the cost of doctors visits, hospital stays and trips to the emergency room as well as surgery, urgent care and prescription drug coverage. Depending on the type of health insurance policy you have, health insurance premiums can vary in both cost and level of flexibility.

Premium Definition

• According to Investorwords.com, a health insurance premium is a flat fee that is paid in exchange for medical benefits. As long as your health insurance premiums are paid, you are provided with access to medical care that is covered according to the terms of your health insurance plan contract. The health insurance premium is typically set for a defined period of time, such as one year or six months of continuous health insurance coverage, and payments are often broken up into affordable installments.

Premium Costs

• The cost of health insurance premiums often vary depending on the health of the individual, and they may be determined in part based on the insured's medical history. The cost of insurance premiums can also be affected by the type of plan chosen. A less comprehensive plan with more basic medical coverage typically offers a lower premium. Health insurance premiums are typically paid on a monthly or quarterly basis, and the rate is generally set at the time of the policy enrollment but may be adjusted over time.

Employer-Paid Premiums

• Many people take part in a group health insurance plan offered through their employer, labor union or other professional organization. HealthInsuranceControl.com indicates that many employers and professional organizations offer a group discount or provide a contribution to cover partial payment of the insurance premium for members and employees. In addition, health insurance premiums are often lower for group health insurance, because the risks are lowered when they are spread across a greater number of people.

Minimum Premium Plans

• According to BLS.gov, some employers and professional groups offer a self-insurance plan in which the group sets aside funds to cover the risk of health costs. To help alleviate some of the risk to the group, an arrangement may be made for an insurance carrier to handle the administration of claims and provide insurance protection against the possibility of large claims. The minimum premium is the minimum charge required to activate a policy with the insurance company.

Premium Payments

• Health insurance premiums must be paid as agreed in order to provide insurance and prevent a lapse in policy coverage. Most health insurance companies provide several options for the payment of health premiums. If health insurance is obtained through an employer, most premiums are paid on behalf of the insured through an automatic payroll deduction. You can also arrange automatic drafts to your insurance company directly from a checking account. Most insurance companies also accept credit card payments for premiums as well as check or money order.