Health insurance is a complex subject, but most people understand that the purpose of a health plan is to provide protection from the high costs of health care. A good health plan helps shield you from the potentially devastating financial costs of unexpected serious illness and injury. It helps reduce your share of the costs for treating less serious problems such as colds and sprained ankles. And today, most health plans even encourage you to stay healthy by paying 100% of the costs for preventive care services such as annual exams, screenings, and vaccinations.
But there's another way health insurance saves you money, and it's one that most people never think about. It's called the provider discount—and if you participate in a health plan of any kind, you benefit from it every time you see a health care professional that participates in your plan.
One of the ways health insurance companies compete with each other—and one of the ways they help plan participants save money—is by negotiating with providers (doctors and hospitals) the price they will pay for health care services. Providers agree to offer discounts on the list price, or charge rate, of their services in exchange for the additional patient volume the health plan has to offer. These discounts are subtracted from the total list price of the services—leaving patients and insurers with smaller bills to pay.
In many instances, the discounted price negotiated by the health insurer may be less than 50% of the list price for the service.
So just by themselves, provider discounts are a good reason to have health insurance. By joining a plan, you are automatically eligible for the discounted rates negotiated by your health insurer. Whenever you visit the doctor, you will pay substantially lower rates than you would if you did not have health insurance.
Even if you have a very high-deductible plan and you never meet your deductible, you will still save substantially. While it may seem that you are paying just as much out of pocket as someone without a health insurance plan, it's important to remember that you are paying a discounted rate instead of the provider's list price.
Health insurance may seem complicated, but it's much easier once you understand the language. Expand your health insurance vocabulary today with the WPS resource, "Understanding Common Terms and Definitions," a handy glossary of industry terms.
For more health insurance tips, information, and money-saving strategies, visit the WPS Learning Center, where you'll find articles on preventing illness, making wise health decisions, and other timely topics. To ask a question or request a quote for a high-quality individual or family health plan from WPS, call 888-245-4197 to talk with a friendly representative today.