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 until you have paid $5,000 in health insurance costs (excluding preventative services such as an annual physical by your PCP). After you meet the deductible, you will be responsible for the co-pay amount associated with the health service you receive.
Note: 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 after you meet your deductible.
Co-insurance: Co-insurance 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/limit.
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)
Maternity and newborn care
Mental health and substance use disorder services, including behavioral health treatment
Rehabilitative and habilitative services and devices
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care
Note: These services may still require you to meet a deductible and may require co-pays or co-insurance.