Five Ways Your Premium Dollar Works For You

Because health insurance is an investment, you need to know how that money is being used for your benefit. That’s why BCBSND shows the breakdown of every dollar paid in insurance premiums every year—so you can know exactly how your health dollars are spent to protect your well-being.

The basics
When you purchase a health plan, your money gets combined with the premiums paid by other BCBSND members. When pooled together, this money covers the health care expenses of the entire group. The combined power of this group also increases your purchasing power with health care providers.

Five ways for health
From that pool, your premium dollar gets split five ways:

1.       84.9 cents directly pays for medical costs, such as:

  • Doctor visits
  • Exams, tests, screenings and procedures
  • Both inpatient and outpatient surgeries
  • Hospital stays
  • Emergency room or urgent care visits
  • Medical equipment such as crutches, braces, etc.
  • Prescription medication

2.       7.7 cents goes toward BCBSND administrative costs and programs, including:

  • Health and wellness improvement programs
  • Chronic disease prevention and management initiatives
  • Member claims processing and customer service
  • Technology needs to connect with members and doctors
  • Licensing and regulatory fees paid to government agencies
  • BCBSND facilities, salaries, operational costs, property and income tax

3.       3.6 cents are kept in reserves in case of a catastrophic event

4.       2.2 cents goes to the Affordable Care Act (ACA) fees and taxes

5.       1.6 cents pays the state premium tax

What are reserves?
Reserves for health insurance operate the same way they do for banks. BCBSND is required to keep money on hand to assure members of our ability to pay medical claims on their behalf. Reserve minimum amounts are set by the National Association of Insurance Commissioners and the national Blue Cross Blue Shield Association.

What makes BCBSND different?
By focusing on patient-focused care, BCBSND is working to curb the rising costs of medical care. To do this, we’re partnering with medical providers to increase the quality of your health, instead of rewarding the volume of health care you receive. Additionally, by being a BCBSND member, you get the most access to care across the state for the best negotiated rates.

Additional resources
Want to compare our results to other years? Check out the:

Get the most out of your insurance by making sure you’re accessing all of your benefits.