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HEALTH INSURANCE
ESSENTIAL TERMS
Confused about all of insurance terms you hear people say when they talk about their new health plan? Struggling to follow along with a broker when they are telling you about your new plan? That ends today! Here are the most important and common terms that everyone should understand.
Premium
The amount of money paid by an individual or their employer to an insurance company to maintain health insurance coverage. Is usually paid monthly, but some plans allow their clients to pay quarterly, semi-annually, or annually.
Coinsurance
The percentage of the cost of a healthcare service that an individual is responsible for paying AFTER meeting their deductible. These are typically represented with fractions like 50/50, 60/40, 70/30, 80/20, and 100/0. When represented as a fraction, the first number is the percentage that the insurance carrier will pay, and the second number is the percentage the individual will pay.
Copay
A fixed amount of money that an individual pays at the time of service, such as when they visit a doctor's office or fill a prescription.
Deductible
The amount of money that an individual must pay out of pocket before their insurance coverage begins. Some plans will not offer any coverage until the deductible is met, but other plans offer set copays for certain expenses like doctor’s visits and prescriptions that stay the same both before and after the deductible is met.
Out-Of-Pocket Max
The most amount an individual will have to pay out of pocket for covered healthcare expenses during a given period, typically a year. It typically includes your deductible, coinsurance and copays, but this can vary by plan. Once the out-of-pocket max is reached by the individual, the insurance plan pays 100% of the covered cost.