Here are definitions to some of the most common health insurance terms associated with health insurance plans.
Premium: A premium is the amount of money you pay for your health insurance plan every month. You pay a premium to keep your health insurance active, whether or not you use the insurance.
Deductible: A deductible is a set amount you have to pay every year toward your medical bills before your insurance company starts paying. This means if your plan has a $5,000 deductible you'll be responsible to pay the full amount of the cost of a health visit (excluding many preventative services such as an annual physical by your PCP) until you have paid $5,000 in health insurance costs. After you meet the deductible, you will be responsible for the co-pay amount associated with the health service you receive.
*Often health insurance plans with lower premiums have higher deductibles, so be sure you check to make sure the deductible is something that works for you.
Co-pay: A co-pay is the flat fee you pay for certain health services after you meet your deductible. For example, if there is a $25 co-pay associated with a primary care visit, you'll pay $25 each time you see your primary care doctor you have after you meet your deductible.
Co-insurance: Coinsurance is the percentage of your medical bill you share with your insurance company after you’ve paid your deductible. So, if you have a 50% co-insurance rate for a specialist visit, you will pay 50% of the total cost of the visit after you meet your deductible.
Out-of-pocket maximum/limit: Out-of-pocket expenses are any costs you have to pay yourself. An out-of-pocket maximum/limit is the maximum amount of money you or your family will have to spend on health expenses each year. Once you reach your out-of-pocket maximum, your insurance will pay 100% of all covered services.
Note: Monthly premiums do not count towards your out-of-pocket maximum.
Essential Health Benefits: Under the Affordable Care Act (ACA), all individual and small group health insurance plans must cover all of the following:
- Ambulatory patient services (visits to doctors and other healthcare professionals and outpatient hospital care)
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Note: These services still require you to meet a deductible and may require co-pays or co-insurance.