Understanding the complicated language in health insurance can be intimidating. Premiums, deductibles, copays, and coinsurance become overwhelming when you don’t understand them but still have to pay. Take a second to understand what these terms mean and when they affect you in order to save on costs.
Defining the Jargon
Take a step back and understand the language doctors and insurance agencies use before diving into the process of payment.
Premium: This is the monthly payment for health insurance. It is continuously paid whether or not you use it, like your car insurance or your cell phone bill. Also, if you receive health coverage from your employer, there is a good chance they cover all, if not most of the premium.
Copay: This is the set rate for healthcare services in need of care. These are set based on the plan you have, so you may have $225/emergency room visit and $30/doctor appointment.
Coinsurance: This is the percentage of your medical bill that you pay after your deductible has been settled. Your health insurance will cover the rest of the bill. An example would be you pay 30% of the charges and the insurance company would cover the remaining 70%, and this is how each individual bill works.
Deductible: This is the cost you have to pay out-of-pocket before the insurance company will cover their share. This is renewed annually.
Out-of-Pocket Maximum/Limit: This is the most you would have to pay for medical charges over the course of one year before your insurance company would pay 100% of each bill.
The Process of Paying
Here’s a scenario: you have health insurance and pay the premium monthly. Then, you need to go to the hospital where you can pay the full cost or copays as designated in your coverage.
As the year continues, you continue to have medical appointments and soon your out-of-pocket payments add up to the deductible for the year (this does not include copays). Then your insurer steps in and begins to pay a major portion of your bills, and whatever is left for you to pay is coinsurance.
Fast-forward to when your copays and coinsurance total your defined out-of-pocket maximum. Then, your insurance company takes on 100% of medical bills until the year ends.
What to Watch For
Another issue that you need to be aware of is whether or not the healthcare provider you go to is “in-network” or “out-of-network”.
In-Network: This is when the provider and insurance company have agreed to lower costs. When you stay in-network bills will be cheaper, and what you pay counts towards the deductible and out-of-pocket maximum.
Out-of-Network: When the provider you go to does not have an affiliation with your insurer, then you are out-of-network. The ramifications are much more expensive bills, sometimes even the entire bill is left for you. Read through your insurance policy to see what the stipulations are for out-of-network, because some may still help pay.
Take the time to understand the complicated language that goes into health insurance so you won’t be as intimidated. Be confident in your knowledge of medical bills so insurance companies do not take advantage of you.