A recent survey by UnitedHealthcare showed only 9% of Americans truly understood the terms of their health insurance policies. This number is up 3% from the 2016 study by PolicyGenius, but is still low enough for serious concern. When comparing policies for purchase, it is essential to fully understand the policy in order to make the best choice for yourself and your family. Here are the definitions you need to get started.
- Premium: Your premium is the amount you pay per month to maintain your policy. This is separate from any costs incurred via medical appointments or procedures, and it is either billed to you monthly or taken out of your paycheck if you get insurance through your employer.
- Deductible: This is the amount you must pay for medical services per calendar year prior to your insurance company covering anything. However, many plans have certain things they cover prior to meeting your deductible, such as preventative care (your yearly physical, for example) or medications.
- Copay: This is the cost you pay per visit, procedure, or medication. It is typically a flat rate, such as $20 for a doctor’s office visit, no matter the cost of the visit. The cost may vary depending on if your provider is in network or out of network.
- Coinsurance: This is a percentage you pay of the total cost of a procedure. The difference between copay and coinsurance is that the amount you pay when you have coinsurance due differs depending on the cost of the procedure or visit, whereas the copay is a flat rate. Coinsurance typically begins after you meet your deductible, when the company begins to pay for portions of your services.
- In Network and Out of Network: Your insurance company has preferred providers or a preferred local area. This is their network. Providers that are outside this network are typically more costly to see.
- Out of Pocket Maximum: This is total amount, per calendar year, that your insurance company expects you to cover. Your out of pocket maximum includes anything you pay for copay, coinsurance, and deductible payments. It does not include your premium. Once you hit your out of pocket maximum, your insurance company will cover 100% of your medical costs, with the exception of your premium payment.
Knowing what these terms mean can make a big difference in the policy you choose. National Health Insurance Agencies can you help choose the best plan and answer your health insurance questions. Contact us today for more information.