In health insurance, what does the term "premium" refer to?

The term "premium" in health insurance specifically refers to the fixed amount that a policyholder is required to pay to maintain their insurance coverage. This payment is typically made on a monthly or annual basis. Premiums are essential for keeping the policy active and ensuring that the insurer assumes the financial risk associated with future healthcare costs incurred by the policyholder.

Premiums do not correspond to the total costs of medical procedures or the amounts covered by insurance claims; these aspects relate to benefits and out-of-pocket expenses. Similarly, deductibles represent a different part of the financial arrangement in health insurance, specifically the amount a policyholder must pay out-of-pocket before the insurance coverage kicks in. Thus, understanding that premiums are a fixed cost for maintaining coverage is critical for comprehending the overall structure of health insurance policies.