Health Sense: The Basics of Health Insurance Costs

Understanding health insurance payments, deductibles and copays can be confusing. With so many case-by-case payment structures and nuanced terms, it can seem like a tangle of terminology that only the experts understand. We’ve defined some common terms below to help build your health insurance vocabulary and give you a better understanding of the payment system.

Deductibles

Healthcare.gov defines a deductible as “…the amount you pay for covered health care services before your insurance plan starts to pay.”

So, if you had a $500 deductible, you’d pay the first $500 of covered services yourself. After you pay your deductible, you typically only pay a copay and coinsurance (defined below)  for covered services, and your insurance company pays the rest.

It’s important to understand that many insurance companies pay for yearly checkups or disease management plans prior to you meeting your deductible. Some plans may also have separate deductibles for things like prescription drugs. 

Copays

A copay is “a fixed amount ($20, for example) that you pay for a covered health care service after you’ve paid your deductible.”

Your copay can change depending on whether you’ve paid your deductible in full. For example, if a visit to the doctor costs $100 and you haven’t paid your deductible, you’ll pay the full $100. If your deductible has been paid in full, you will pay just $20.

Plans with lower premiums typically have higher copays.

Coinsurance

The portion of medical cost that you pay after your deductible has been met is your coinsurance. Essentially, you and your insurer each pay a share of costs up to 100%.

If your coinsurance was 20% and you met your deductible for example, you would pay 20% of covered medical bills and your insurance would pay 80%. So, if you needed a procedure that cost $1000, you would be responsible for paying $200 and your insurance would pay the remaining $800.

Out-of-Pocket Maximum

The out-of-pocket maximum is the most you are expected to pay for health insurance in a year. This includes deductibles, copays and coinsurance. Once you hit this limit, your insurer pays for covered expenses and prescriptions for the rest of the year. Depending on your plan, the numbers can vary widely.

If you’re ever unsure about whether a certain plan or provider will be covered by your insurance, you can call your insurer for more information. Don’t forget to check out our handy video for even more information.

 

BetterMed accepts most health care insurance plans, excluding Medicaid. We’re happy to answer any questions you might have about using insurance at any of our clinics. Please call us at 804-639-7555 or email info@BetterMedCare.com.

Works Cited

“6 Things to Know about Deductibles in the Health Insurance Marketplace.” HealthCare.gov, www.healthcare.gov/blog/6-things-to-know-about-deductibles-in-the-health-insurance-marketplace/.
“Copayment – HealthCare.gov Glossary.” HealthCare.gov, www.healthcare.gov/glossary/co-payment/.
“Copays, Deductibles and Coinsurance.” Cigna, a Global Health Insurance and Health Service Company, www.cigna.com/individuals-families/understanding-insurance/copays-deductibles-coinsurance.