5 Terms to Know About Health Insurance

Understanding how your health insurance works has become complicated; in particular, knowing when the insurance company pays and when you do. For many of us there’s the worry with each visit, “Will this be covered? And if not, how much is it going to cost me?” So, let’s break down how your health care services are paid for when you have health insurance. 

Before your health insurance begins to pay for covered services, you must pay some combination of premiums, deductibles, co-pays and co-insurance. The dollar amount for each of these is established by your health insurance plan.

 

1. Monthly premium. This is a set amount you pay each month based on whether you have an individual or family plan. If insurance is provided through an employer, premiums are often split between the employee and the employer. If you have personally purchased insurance through the new Federal health insurance exchange, you may qualify for a Federal subsidy which covers part of the premium.
2. Deductibles. This is the amount the insured individual or family must pay for services before the insurance kicks in and starts to pay for part of the bills. Not all plans have a deductible and the amount of the deductible is different from plan to plan. The tab resets each year and may take several health care visits and/or procedures over time before it is reached.
3. Co-payments/Co-pays. Plans may use co-pays instead of deductibles or switch to co-pays (in particular for medications) after the deductible is met. This is a set amount the insured person pays at time of care. Co-pays typically range from $10-$100 depending on the service. The insurance then pays the balance of the bill directly to the provider.
4.  Co-insurance. Co-insurance is based on you paying a percentage of the total bill. For instance, you pay 20% and the insurance covers 80% of the total. In some cases, after you’ve met the deductible, the co-insurance percentage determines how much you pay. 
5. Out-of-pocket maximum. Here’s the good news: Your insurance plan caps how much you will pay for covered services (in addition to your monthly premiums) during your policy period, which is usually one year. If the out-of-pocket maximum is reached, your insurance begins to pay 100% of the bill. 

Be sure to know how your insurance plan breaks down the costs to you, what’s included in your maximum-out-of-pocket expenses, and when you’ll need to pay. It will help eliminate surprises. Also, work closely with your health care provider’s billing department. There are often options for payment plans as well as financial assistance. It’s never a good idea to put off your health – in the end, it could cost you more than just money!

A version of this post also appeared in the Norwich Bulletin Healthy Living column.

Related Resources

Resources: Billing
Family Advocacy Programs: Healthy Start Insurance Program
Family Advocacy Programs: HUSKY Insurance Program