Health Insurance Costs Definitions

Health Insurance Costs

For many of us, the words describing the costs of healthcare coverage are new and sometimes confusing. But understanding them is important in making decisions and controlling your cost. Here are a few you want to understand: Premium — Think of this as your monthly bill – the amount you must pay the health insurance company, on-time each month, or you may lose coverage. You pay this even if you don’t use healthcare services that month. Deductible — Generally, the amount you spend on covered healthcare services and prescriptions out of pocket before your health insurance company starts to pay a percentage of your bills. Health plans vary on what they count towards the deductible. Plans with lower premiums tend to have higher deductibles. Copay (or copayments) — A fixed amount ($10, for example) you owe for a prescription or medical visit that is covered under your health plan, usually paid when you receive the service. For most plans, the copay phase of cost-sharing starts right away; the exception is Health Savings Account (HSA) plans for which you have to meet the deductible first. Coinsurance — A percentage of costs for a covered healthcare service or medication you pay (30%, for example) AFTER you’ve met your deductible. Let’s say you’ve met your deductible: You pay 30% of a $100 service which is $30. The insurance company pays the rest (70%). The percentage amount varies depending on the level of plan. Out-of-Pocket Maximum —The most you’d ever have to pay for covered services and prescriptions in a plan year. After you spend this amount on deductibles, copays and coinsurance, your health insurance company pays 100% of the costs of covered benefits. Your monthly premium or anything you spend for services your plan doesn’t cover (out-of-network) do not count toward this limit. For more information, review your Summary of Benefit Coverage. This can be found by going to your on-line account, then Plan Documents and then Summary of Benefits.