Health insurance has its own language, and the words matter because they decide what you actually pay. Here is a plain-English guide to the four terms that trip everyone up, plus a simple example that ties them together.
Your premium is what you pay monthly to have the plan. The deductible is what you pay before the plan starts sharing costs. A copay is a flat fee for a visit. Coinsurance is a percentage you pay after the deductible. The out-of-pocket maximum is the most you will ever pay in a year, after which the plan pays 100 percent.
The amount you pay for covered care before your plan begins to pay its share. If your deductible is 2000 dollars, you cover the first 2000 dollars of care, then the plan starts helping.
You pay firstA flat fee you pay for a specific service, like 30 dollars for a doctor visit or 15 dollars for a prescription. Copays are predictable and often apply even before you meet the deductible.
Flat feeYour share of a cost as a percentage after you meet the deductible. If your coinsurance is 20 percent, the plan pays 80 percent and you pay 20 percent of the bill.
Your percentageThe most you can pay in a plan year for covered care. Once you hit it, the plan pays 100 percent of covered costs for the rest of the year. This is your financial safety net.
Your yearly capSay your plan has a 2000 dollar deductible, 20 percent coinsurance, and a 6000 dollar out-of-pocket maximum. You have a procedure that costs 10000 dollars. First you pay the 2000 dollar deductible. Then coinsurance kicks in, so you pay 20 percent of the remaining 8000 dollars, which is 1600 dollars. Your total so far is 3600 dollars, which is under your 6000 dollar cap, so that is what you owe. If more care pushed you past 6000 dollars for the year, the plan would pay 100 percent from there.
These numbers are connected to your premium. A plan with a low monthly premium usually has a higher deductible and out-of-pocket costs, and a plan with a higher premium usually has lower costs when you need care. The right balance depends on how much care you expect to use. We help you find the plan where the total yearly cost, premium plus expected out-of-pocket, makes the most sense for you.
A deductible is the amount you pay for covered care before your plan starts paying its share. For example, with a 2000 dollar deductible, you pay the first 2000 dollars of care, then the plan begins to help.
A copay is a flat fee for a service, like 30 dollars for a visit. Coinsurance is a percentage of the cost you pay after meeting your deductible, such as 20 percent of the bill.
It is the most you can pay for covered care in a plan year. Once you reach it, your plan pays 100 percent of covered costs for the rest of the year. It is your financial safety net.
No. Your premium is what you pay monthly to have the plan, and it does not count toward your deductible or out-of-pocket maximum. Those are separate amounts you pay when you use care.
It depends on how much care you expect. Low-premium, high-deductible plans suit healthy people, while higher-premium plans with lower deductibles suit those who use care often. We help you compare total yearly cost for free.
Free, no-pressure help making sense of your options and costs.