Learning about the terminology related to health insurance can be very confusing, especially since it’s so important to understanding the benefits that you have and what you will be responsible for under your health plan. Without realizing what you are entitled to and what you have to come up with on your own, you could be facing an unpleasant surprise after visiting the doctor or getting a procedure done. This article is intended to help you answer one of the most common questions about deductibles, copays, and coinsurance.
It’s vital that you be aware of this if you already have health insurance, but it’s even more important to be informed if you are in the market for new insurance. These are the finer details that can help you identify the plan you really need. With the launch of the healthcare reform known as the Affordable Care Act, it’s more important than ever that you educate yourself.
One of the most common terms related to your health insurance coverage is your premium. This refers to what you pay each month for the privilege of having healthcare coverage. Another important term is deductible, and this is usually one of the first numbers you will encounter. This is considered the amount that you must kick in first for your healthcare costs, before your insurance company will step in to pay their portion. Choosing a healthcare plan with a high deductible may not be worth it if you don’t hit that deductible to allow the benefits to kick in.
A co-pay and co-insurance are different than a deductible. These refer to deductible as well, so you can see why it’s so important to shop around and identify the right mix of deductible and premium as well. A co-pay is the routine cost for services you’ll need to pay at each doctor’s visit, for example. This is an amount for which your deductible does not apply, so bear in mind that your co-pays are not building you up to that deductible “cap” where the health insurance company kicks in. Your coinsurance, on the other hand, refers to the percentage that you will be responsible for after the deductible has kicked in. For major procedures, for example, you’ll likely be responsible for some portion of the treatment, and you’ll want to read the fine print in your insurance policy to determine this.