Understanding health insurance terminology is key to making informed decisions about your healthcare coverage. Here are some essential terms you should know:
Premium
A premium is the amount you pay to your insurance company for health coverage. This payment is usually made monthly, quarterly, or annually, depending on your insurance plan.
Deductible
A deductible is the amount of money you must pay out of pocket for healthcare services before your insurance coverage begins to pay. For example, if your plan has a $1,000 deductible, you will need to pay the first $1,000 of covered services yourself.
Copayment (Copay)
A copayment, or copay, is a fixed amount you pay for covered healthcare services at the time of the visit. For instance, you might have a $20 copay for a doctor’s office visit or a $10 copay for prescription medications.
Coinsurance
Coinsurance is your share of the costs of a covered healthcare service, calculated as a percentage (e.g., 20%) of the allowed amount for the service. For example, if a hospital visit costs $1,000 and your coinsurance is 20%, you would pay $200 while your insurance pays the remaining $800.
Out-of-Pocket Maximum
This is the maximum amount you have to pay for covered services in a plan year. Once you reach this limit, your insurance plan pays 100% of the covered services for the rest of the year. This amount typically includes deductibles, copayments, and coinsurance.
Network
A network is a group of doctors, hospitals, and other healthcare providers that have contracted with your insurance company to provide services at discounted rates. Staying within your plan’s network usually results in lower out-of-pocket costs.
Conclusion
Familiarizing yourself with these health insurance terms can empower you to make better decisions about your healthcare coverage. At Alexa Jimenez, we are committed to helping you understand these concepts and navigate the complexities of health insurance. Whether you’re choosing an individual plan, family coverage, or exploring Medicare options, having a clear understanding of these terms will help you select the best plan to meet your needs and budget.