Four health insurance terms you should understand

When you’re shopping for a health insurance plan, it’s easy to get confused by all the terminology. Here’s a guide to four of the most important health insurance terms that you need to know:

Co-payment. A co-payment is a fixed amount that you are responsible for paying for a medical service. Some health insurance plans require policyholders to reach a health care spending threshold — called a deductible — before they start paying co-payments for various medical services. For example, after meeting your deductible, you may pay only a $30 co-payment for a routine office visit, with the health plan paying the rest of the cost. Many plans have co-payments for prescriptions as well.

Premium. This is the amount you must pay for your health care coverage each month, whether you pay for your health insurance coverage yourself or through a deduction from your paycheck. You also pay your premiums whether or not you use your health insurance plan that month.

Deductible. Here’s where things start to get a bit confusing. A deductible is the amount of money you’re required to pay for your health care before your insurance company begins to pay its share of the cost. Deductibles vary among health plans. In some cases, deductibles do not apply to routine office visits and/or preventative care.

Coinsurance. This is the percentage of the total cost of a medical service that you’re responsible for after you’ve paid your plan’s deductible. Suppose you’ve already paid out your plan’s deductible and your coinsurance is 30 percent. For a $2,000 hospital visit, you would be responsible for $600.

We believe it’s crucial that consumers understand their health insurance plans. If you have any questions about how your plan works, please call us at (800) 821-7711. We are happy to help you.