Part of what can make health insurance confusing at times is the terminology and industry lingo. Once you know what the key terms mean, it can help a lot with understanding your plan and making a great choice.
Here a few key terms and explanations:
- Premium – the amount you pay every month to have insurance.
- Tax subsidies – the amount the government contributes towards your monthly premium, if you qualify based on your income, household size, and a few other factors.
- Deductible – the amount of medical expenses that you pay before the insurance company kicks in (premiums don’t count towards the deductible). Deductibles reset on January 1st each year.
- Co-insurance –after you pay your deductible, this is the amount that you pay vs. the amount that the insurance company pays. For example, assume your co-insurance rate is 20% and you’ve already paid your deductible. If you get a $1000 medical bill you would be responsible for $200 of the bill and the insurance company would pay the rest.
- Co-payment – a flat fee you pay each time you go to the doctor (or emergency room). Keep in mind, these payments typically just cover the cost of visit to the doctor’s office, and do not include additional tests or treatments you may receive. For example, if you have a $20 co-payment and you go the doctor to be tested for strep throat, you’ll be billed for the strep test as well. Many plans have co-payment amounts for prescriptions as well.
- Max-out-of-pocket – the maximum amount that you could ever have to pay in a calendar year. This does not include monthly premiums, but does include everything else (deductible, co-insurance, and other out of pocket expenses).