Understanding Your Health Insurance: Deductible, Co-pay, Co-insurance, and Out-Of-Pocket-Maximum

Health insurance can be confusing, to say the least, and if you’re not well-acquainted with the terms in the title of this post, even more so.

Sometimes patients feel trapped in a bureaucratic maze.  That’s why we’ve put together this brief guide about understanding your health insurance.  We hope the information shared here will make it all a little less intimidating and a lot more accessible.

Defining the terminology

Knowing what certain terms mean is a good place to start, so let’s do that!

  • Deductible: This is the amount that you pay out of pocket per the calendar year of coverage for additional services which are not routine.  When considering your health insurance premiums, it may be useful to increase this amount, as the amount you pay in insurance premiums will be reduced.  But taking this step may also lead to having to pay the higher deductible in full, should something go wrong with your health, leaving you well out of pocket.  This strategy works best for those who foresee excellent health for the coming year.
  • Co-pay: This is what your insurer charges for routine care like doctor’s visits, prescriptions or a trip to the emergency ward. This is usually a fixed rate per service rendered.
  • Co-insurance: Similar to the co-pay, co-insurance applies to services which are less routine in nature.  Usually expressed as a percentage of the cost of any given service, this is the out-of-pocket expense which applies after you’ve reached your deductible amount.  Co-insurance amounts vary by insurer (like everything else) and some plans don’t feature it.
  • Out-of-Pocket Maximum: This is the most you’ll be required to pay out of your own pocket per calendar year under your insurance plan.  It includes all the terms covered above.  This amount is slightly higher than your deductible, as it includes all related charges.  Once you hit your deductible, you’ll continue to be charged co-pay for things like doctor’s visits until you hit the maximum.

Lifetime Maximums

Many insurers used to limit coverage amounts, generally capping them at $1 million per lifetime.  The Affordable Care Act outlawed this practice.

Shopping around for a health insurance plan can be a struggle but choosing a plan which speaks to you and your family’s needs should consider these terms and what they mean.  Staying abreast of legislative changes which can potentially impact your insurance coverage is something every American should be engaged with.

Obility Patient Advocates specialize in educating on their benefits and how it relates to their care and their pocket book.  Contact us.

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