No matter how much you trust your insurance company or plan, it is vital that you understand, at least on a basic level, what exactly health care insurance entails. You should have some familiarity with terms like deductibles and copayments, and know what kind of plans you can choose from.
Premium refers to the money you owe the insurance company in order to purchase your health care plan. It’s usually paid on a monthly basis. Most companies offer their employees health insurance, so it’s more than likely that your employer will pay part of the premium.
The deductible is the money you need to pay annually in order for your insurance to kick in. It comes down to insurance companies requiring you to pay some amount of money out of your own pocket before they start paying for care. Some plans only involve deductibles for services outside of the “network”. This means that you’ll only pay a deductible if you can’t use your insurance for a certain service. Additionally, you usually won’t have to pay a deductible for preventative services.
Generally speaking, a low premium goes hand in hand with a high deductible, and a higher premium goes along with a low deductible. When buying a plan, you need to factor in whether you would prefer to pay a smaller amount per month but suffer higher out of pocket expenses if you do require a medical service. The alternative is paying a larger amount monthly, but have lower costs if you do get injured or sick.
Copayment refers to a set amount of money that you have to pay out of pocket for each service you receive. On the other hand, if the amount of money you’re paying out of pocket is actually a percentage of the cost of the service, it’s referred to as co-insurance.
Whether copayments or co-insurance, the amount of money that you end up paying out of pocket can vary greatly depending on whether it’s from a provider who’s in your network and on the type of service you’re receiving. Just like a deductible, you won’t usually need to pay either of the two for preventative services.
Your out of pocket expenses are capped for every service. The out of pocket limit is the maximum amount that you will have to pay annually for services covered by your plan. As soon as that cap is reached, however, the insurance will pay for all remaining covered expenses.
And of course, copayments and co-insurance and deductibles aren’t the only differences between different plans. So whenever you shop for one you need to pay attention to whether that particular plan is offering all the services you require. You also need to check the fine print to figure out what the limits on coverage of the services are. Additionally, different plans have different copayments and co-insurance for different drugs, so incorporate that knowledge in your search for the most cost-effective plan.