Health Insurance Glossary

Common terms you might see in your health insurance policy that aren't actually common knowledge

For most people, health insurance plans are extremely confusing, and the resources available to us online do not make them any easier.

 

The world of insurance is built with a unique terminology that most people are not familiar with until they begin to choose a healthcare plan. Therefore even when we have health insurance coverage, we are easily confused when it comes down to payment.

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Premium

A little bit different that its name “premium” itself is not a premium service. Your premium on your health insurance is your monthly bill to have health insurance. This is your basic payment in order to have your health insurance.

Deductible 

An insurance deductible is what your health insurance provider may require you to pay towards your healthcare before their payments start to kick in. For example, if you have a deductible of $1,500, and you have not paid any of that towards your medical bills yet, when you have a medical bill that amounts to $1,500 or less, you will have to pay the total amount. However, the next time you have a bill your deductible will already be met.

Copayment 

A copayment, or co-pay, is the amount that you have to pay for a health service after your deductible has been met (if you have one). This is usually a fixed fee, meaning that is will always be the same price for the same or similar service. For example, if you co-pay to see your gynecologist is $30, it will always be $30. The only difference is if you have a different medical service performed, there may be a different value of co-pay required. For example, you may have bloodwork done at your gynecologist, and your co-pay to the lab is $10.

Coinsurance 

Many people get a co-pay and co-insurance confused, and that’s because they are relatively similar. In the same way that a co-pay kicks in after your deductible is met, coinsurance is only applicable after your deductible is fully paid. Coinsurance is a percentage of the bill that you are required to pay after your deductible. For example, if you trip to the gynecologist is $130 and your coinsurance is 20%, you will have to pay 20% of $130, or $26, and your insurance will cover 80%, or $104.

Maximum out-of-pocket 

Once your deductible is met, if you have one, you will have something called a maximum out of pocket that you will ever be required to pay in a year through your co-pay or your coinsurance. For example, if you have a maximum out of pocket of $6,000 and have had a year of many medical appointments, your co-pay or coinsurance may be adding up to quite a lot of money over the course of the year. If you have already spent $5,980 in copayments during the same year and you have a medical appointment that is $130. If your usual copay is $30, you will only need to spend $20 against your copay to reach $6,000. From there you will not owe any further copayments for the rest of the year as you have hit your maximum out of pocket.