When shopping for a new individual health insurance plan, one of the main challenges people face is understanding the sea of acronyms and terminology. Here is a list to help understand some of the most basic individual health insurance terms.
Your premium is the amount you pay to the health insurance company each month (or quarter) to maintain your coverage. When you’re researching plans it’s usually the first cost you see and consider, but it’s important to also factor in the copayments, deductible, coinsurance, and out-of-pocket maximums, described below.
Your co-pay, or copayment, is a flat dollar amount you will pay your healthcare provider for a covered service. For example, you may have to pay a $30 copayment for each covered visit to a primary care doctor, and $10 for each generic prescription filled. Copayments vary from plan to plan and are sometimes different depending on the type of covered service you receive.
Your deductible is the amount you must pay for covered services before your health insurance begins to pay. Insurers apply and structure deductibles differently. For example, under one plan, a comprehensive deductible might apply to all services while another plan might have separate deductibles for covered services such as prescription drug coverage. Deductibles can significantly affect the price of your insurance premium. Typically, plans with lower deductibles offer more comprehensive coverage but have higher premium costs.
Coinsurance is a certain percent you must pay each benefit period after you have paid your deductible. This payment is for covered services only. You may still have to pay a copay.
For example, your plan might cover 80 percent of your medical bill. You will have to pay the other 20 percent. The 20 percent is the coinsurance.
5. Out-of-pocket Costs
Cost you must pay. These are your expenses for medical care that aren’t reimbursed by insurance. Out-of-pocket costs include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren’t covered. Out-of-pocket costs vary by plan and each plan has a maximum out of pocket (MOOP) cost. Consult your plan for more information.
To read more or find other relevant insurance terms, check out this glossary of terms on medmutual.com.