Dreading working on your health insurance? Wishing there was an easier way? Even if you’ve bought health insurance many times, the terminology and procedures can be confusing.
Here are the basics:
1. What is a deductible?
A deductible is how much you pay out of your own pocket for most medical services before your insurance kicks in.
For example, if your plan has a $1,000 deductible, your insurance won’t pay any bills until you’ve spent this amount. (Note: Deductibles may not apply to some preventive services such as wellness visits and vaccines.)
BE AWARE: There are many deductibles that can range into several thousand dollars.
2. What is coinsurance?
Coinsurance is your share of any claim for a medical service. For instance, you might pay 20% of the negotiated cost of your service and your insurance pays the remaining 80%. You start paying your plan’s coinsurance once you’ve met your deductible.
Often, the lower your monthly premiums are, the higher your coinsurance will be.
3. What are premiums?
Premiums are the payments you make to maintain your policy.
4. What is a copay?
For some services, an insurer may require you to pay your healthcare provider a copay along with what the insurance will pay. This copay typically consists of a flat fee.
For example, many policies have a $30 to $40 copay for each doctor’s visit. Copays are typically higher for visits to specialists or emergency rooms.
Your plan can require you to pay copays and coinsurance. Copays are often necessary when purchasing prescription medications. If you see a doctor regularly for a chronic health condition and are on medication, look for a plan that has low copays for those visits and for your prescriptions.
5. What is the Out-of-Pocket Maximum?
The out-of-pocket maximum is the maximum amount an individual will have to pay annually. Once this threshold is reached, insurance pays 100% for the remainder of the year.
Ready to find some insurance?
Now that you understand these important terms, you have a starting point. When you compare health insurance companies, start by comparing deductibles, coinsurance, premiums, copays and out-of-pocket maximums. By making a simple graph, you should be able to see at a glance which policy will be best for your needs.