Understanding Your Health Insurance

A simple guide to common insurance terms and your healthcare costs

Health insurance can be difficult to understand. Knowing a few common insurance terms can help you understand your benefits, prepare for healthcare expenses, and avoid unexpected bills.

 

 

Deductible

Your deductible is the amount you may have to pay for covered healthcare services before your insurance begins paying its share of many services.

Example: If your deductible is $2,000, you may need to pay $2,000 toward covered services before your insurance begins sharing the cost.

Some services, such as certain preventive care, may be covered before you meet your deductible. Your specific insurance plan determines what is covered.

Remember: Deductible = What I may have to pay first.

Copay

A copay is a fixed amount you pay for a covered healthcare service.

For example, your plan may require:

  • $25 for a primary care visit
  • $50 for a specialist visit
  • $75 for an urgent care visit

The amount of your copay depends on your insurance plan and the type of service you receive.

Remember: Copay = A set amount I pay.

Coinsurance

Coinsurance is the percentage of the cost of a covered service that you are responsible for paying. It often applies after you have met your deductible.

Example: If your insurance-approved cost for a service is $500 and your coinsurance is 20%, you would pay $100 and your insurance would pay $400.

Remember: Coinsurance = My percentage of the cost.

Out-of-Pocket Maximum

Your out-of-pocket maximum is the most you will generally have to pay during your plan year for covered, in-network healthcare services.

For example, if your out-of-pocket maximum is $6,000, once you have paid $6,000 in qualifying deductibles, copays, and coinsurance, your insurance generally pays 100% of covered, in-network services for the remainder of the plan year.

Your monthly insurance premium generally does not count toward your out-of-pocket maximum. Some other expenses, including certain out-of-network or non-covered services, may not count either.

Remember: Out-of-pocket maximum = My limit for covered, in-network costs.

In-Network vs. Out-of-Network

Your insurance company has contracts with certain doctors, hospitals, clinics, and other healthcare providers. These are called in-network providers.

Using an in-network provider usually means you will pay less because your insurance company has negotiated rates with that provider.

An out-of-network provider does not have the same agreement with your insurance company. Depending on your plan, you may pay more or your insurance may not cover the service at all.

Before receiving care, ask whether the provider and facility are in-network with your specific insurance plan.

Remember: In-network usually costs less; out-of-network may cost more.

How These Costs Work Together

Your insurance plan may include a deductible, copays, coinsurance, and an out-of-pocket maximum.

For example, you might have:

  • $2,000 deductible
  • $30 copay for certain office visits
  • 20% coinsurance after your deductible
  • $6,000 out-of-pocket maximum

The amount you pay depends on the type of care you receive and the rules of your specific insurance plan.

Before Your Appointment

To better understand what you may owe, consider asking your insurance company:

  1. Is this provider and facility in-network?
  2. Do I have a deductible, and how much have I met?
  3. What is my copay for this service?
  4. What is my coinsurance?
  5. How much is my out-of-pocket maximum, and how much have I already paid?
  6. Does my plan require prior authorization for this service?

Please Remember

Every insurance plan is different. The information above is a general explanation and does not replace the terms of your individual insurance plan.