Enrolling in health insurance can feel overwhelming. While premiums get a lot of air time, it’s also important to understand the other costs that are associated with your plans, so you can make the best choice (financially and otherwise) for you and your family. Here are some terms that will be helpful to understand, so that you know what costs you are responsible for and what costs are covered by insurance.
A health insurance premium is the monthly fee you pay your insurance provider for coverage. This cost will remain the same throughout the duration of your plan, so it’s easy to plan for.
A deductible is the total dollar amount you must pay before your insurance kicks in and starts paying a portion of your medical bills. While an annual physical or other preventive care may be covered immediately, most health care costs will not be paid by your insurance company until you have paid your full deductible amount.
For example, if your deductible is $1,000, you’ll need to reach that amount in out of pocket expenses before your insurance takes over.
Plan deductibles reset each calendar year.
This is the percentage of costs you pay for covered in-network services, before your health insurance takes over the rest of the payment.
For example, let’s say you have 20% coinsurance on your plan. After meeting your deductible, for every $100 bill you receive, you’ll pay $20, and your insurance company pays the remaining $80.
Copayment or Co-pay
This is the amount you’re charged each time you receive certain medical care or purchase certain medical equipment or drugs. Each plan has different co-pays for different services.
For example, a plan may charge you a $25 co-pay for a doctor’s visit or a $15 co-pay for prescription drugs.
Out of Pocket Maximum
This is the maximum amount of money you will pay for covered services over the course of a benefit period. The out of pocket maximum does not include your monthly premium, but can include other costs like co-pays, deductibles and coinsurance, depending on the plan. Once you’ve met your out of pocket maximum, your insurance will pay 100% of the allowed amount (i.e. the maximum amount a plan will pay for a covered health care service) for your health insurance costs.
For example, say you got into an accident riding your bike and your total medical costs (ambulance, doctors, surgery, drugs, etc.) totaled $25,000. You have health insurance with a max out of pocket of $13,000. That means that once you have paid $13,000 out of pocket, your insurance will pay the remaining $12,000.
Health Savings Account
A Health Savings Account (or an HSA) is like a savings account, but the money you save is used for health expenses. One of the key benefits of an HSA is that the money you deposit in your account is not taxed. To qualify for an HSA, you must be under age 65 and have a high-deductible health insurance plan.
If you’re wondering what you’ll pay, try Catch’s Health Explorer - it will let you know the premium, deductible, out of pocket max, and costs for common services (before and after your deductible) of all the plans you’re considering. Get started here.