Deductibles, co-insurance and other health insurance terms to know

If you’re shopping for health insurance, chances are you’ll come across some or all of these terms — and knowing what they mean can make a big difference in selecting the right plan for you.

Premiums

A premium is the up-front cost you pay to have insurance coverage. People usually pay premiums on a monthly basis.

Copayment

A copayment is a fixed amount that you must pay when you get medical care. For example, you might have to pay a $20 copayment when you go to a primary care doctor and a $30 copayment when you see a specialist. The copayment is a set amount and does not vary based on what the service costs.

Co-insurance

Co-insurance is a type of out-of-pocket cost some people face when they get medical care. It requires people to pay a certain percentage of the cost of care. For example, if you have a 40 percent co-insurance, it means that you are responsible for 40 percent of the cost of the care you receive. Unlike copayments, in which patients pay a set amount, coinsurance costs will vary depending on what the care costs.

Deductible

A deductible is the amount of money you must spend on covered medical expenses before your plan begins paying for your care. If you have a $3,000 deductible, for example, you would have to spend $3,000 on medical care before the plan begins to pay for your care.

But health plans differ in how the deductibles are handled. In some plans, nearly all services are subject to the deductible, meaning that you have to pay the full cost of those services before the plan chips in for your care. In others, only some services are subject to the deductible while others are covered partially or fully by the plan, even if you haven’t yet met the deductible.

  • It’s important to know what services are subject to the deductible. Some plans have separate deductibles for medical care and prescription drugs.
  • It’s important to know what happens once you meet your deductible. Some plans pay the full cost of care, leaving you to pay nothing. But some require you to pay a fixed copayment when you get care, while others require you to pay co-insurance — that is, a certain percentage of the cost of care.
  • If you have family coverage, it’s important to know whether your family must meet the entire deductible before the plan begins paying for care, or whether each family member will be responsible for a smaller portion of the overall deductible and will only have to meet that limit before the insurer begins paying for his or her care.
  • Because of the federal health law, all plans must cover preventive services at no charge to the member, regardless of whether you’ve met your deductible or not.
  • The money you spend on your health insurance premiums do not apply to the deductible.
Out-of-pocket maximum

This is the most you can be required to spend on medical care covered by your insurance in a given year. Premiums do NOT count toward this figure.

Provider network

Insurance companies contract with doctors, hospitals and other health care providers. The providers who contract with an insurance company are considered to be in that insurer’s network. In many plans, patients will have to pay significantly more to see a provider that is not in the plan’s network. Some health plans sold through Connecticut’s health insurance exchange, Access Health CT, have different networks than plans sold outside the exchange by the same insurers. So if you buy a plan through the exchange, it’s important to check whether providers take that particular plan, not whether they take the insurance company’s coverage.

Formulary

This is the list of the medications covered by an insurance plan. Health plans categorize drugs into tiers, which require different levels of out-of-pocket costs for members who buy them. Because different insurers have different formularies, it’s important to check how a drug you use is covered by any plan you’re considering.

For more on factors to consider when shopping for health insurance, click here.

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