Understanding how insurance works can help make it work for you. Get started by learning these 6 key health insurance terms.
Insurance > Understanding Health Insurance
Health Insurance: 6 Terms You Need to Know
A premium is what you pay for health insurance every month.
A deductible is the amount you must pay for covered health care each year before your insurance begins to cover costs. For example, your deductible could be $1,000. That means you pay all of the bills for covered health care until you reach that amount.
A fixed amount you pay for a covered service. Once a copay is paid, your insurance will handle the remainder of the covered medical expenses.
The percentage of costs you pay of a covered health care service (after you’ve paid your deductible). Your insurance will pay the rest. If your coinsurance for hospital care is 20%, it means you will pay for 20% of the costs, and your plan will pay the other 80%. If your plan has a deductible, the coinsurance is what you’ll pay for some services after meeting your deductible.
5. Out-of-pocket maximum/limit
An out-of-pocket cost is one that you pay, “out of your own pocket.” An out-of-pocket maximum or limit is the cap on the amount of money you or your family will have to pay each year for covered services. After you reach your maximum, your insurance pays the full amount of covered medical costs for the rest of the year.
The facilities, providers, and suppliers your health insurer or plan has contracted with to provide health care services. In-network copayments are usually less than out-of-network copayments.