With so many different health insurance plans on the market, it can be difficult to know which one is right for you and your family. There are a lot of things to consider when making your decision, but understanding some key terms will help you make an informed choice. Here are four key terms to keep in mind when comparing health care plans.
Your co-pay is a flat rate you pay for a covered medical service whenever you receive the service. For example, if you have a $20 co-pay for a doctor's visit, you will pay $20 every time you see the doctor, regardless of the cost of the visit. This amount is paid before any insurance coverage kicks in. Depending on your policy, there may or may not be additional charges for that visit.
Your deductible is the amount you must pay on your own for a medical procedure or service before your medical insurance company pays for anything. For example, if you have a $1,500 deductible, you will need to pay the first $1,500 of any medical expenses yourself before your insurance company steps in. You may meet your deductible at the beginning of the year if you have an appointment with a specialist with multiple expensive tests, or you may have a relatively healthy year and not even hit your deductible.
Once your deductible has been met, one of two things will happen. If you have a traditional plan, your insurance will start paying for any additional medical expenses for the year at 100 percent coverage. Or, if you have a co-insurance, your co-insurance will be activated.
Co-insurance is your share of the costs of a particular medical procedure, typically expressed as a percentage. For example, if you have 80/20 co-insurance, it simply means that you will be responsible for paying 20 percent of the bill, while your insurance company will pay the remaining 80 percent.
Your out-of-pocket max is the most you will have to pay during a policy period for medical expenses, including co-pays, deductibles, and co-insurance. Once you reach your out-of-pocket max, your insurance company will pay 100 percent of all covered medical expenses for the rest of the policy period. Most policies have a per-person max as well as a per-family max.
Making decisions about health insurance can be difficult, but understanding some key terms will help you make an informed choice. Be sure to keep these four terms in mind when comparing health insurance plans, and you'll be one step closer to finding the perfect health insurance plan for you and your family.