Copays…coinsurance…deductibles…what does all of this mean and how will it impact your health care coverage?
When it comes to how much you will pay each month for your health care insurance plan (monthly premium) and how much you will have to pay when you use the benefits (out-of-pocket costs), it is important to understand some key health insurance terms associated with different plans.
A quick guide to understand health insurance terminology
Plans will have an out-of-pocket maximum which is the most you will be required to pay (not including your monthly premium) in a plan year for deductibles and coinsurance. Once this amount is reached, the plan will pay 100% of any other covered medical expenses.
The amount you’re responsible for paying for covered medical expenses before your health insurance plan begins to pay for covered medical expenses each year is known as a deductible. With the exception of a few services, many plans will require the covered to pay 100% of the costs of the benefits used until their deductible is met.
A coinsurance refers to a plan based upon sharing benefits costs between the carrier and you. In other words, the plan pays for a set percentage of the benefit and you pay the remaining amount. For instance, your plan may pay 80% of the cost of an office visit, thus you would be responsible for the remaining 20%.
The fixed dollar payment you make when you use your benefits (e.g., office visit $15, prescription $20, emergency room visit $100, etc.) is known as a copayment. Not all plans have co-payments and when they do, they usually do not apply to a deductible.
The insurance plan year is a 12-month period of benefits coverage. This period may or may not be the same as a calendar year, thus it is important to check with your benefits administrator (if your health care insurance is through your employer) or with the carrier.