Shopping for health insurance can be confusing as soon as large words not part of the average English vocabulary become part of the conversation. You have to know what the words mean in order to understand what you’re getting with your health insurance coverage. So here are three insurance terms you can master to become a more informed healthcare purchaser.
Deductible: This is a fixed dollar amount the health insurance company will require you to pay before they begin paying for your medical bills. For example, if you have a $5,000 deductible, you will have to pay $5,000 out of your own pocket for medical services (outside of covered preventive care) before your health insurance company will begin taking responsibility for a majority of the expenses.
Coinsurance: Once you meet your health insurance deductible, you typically are still required to pay a percentage of medical costs going forward. Typical coinsurance can be 80/20 or 70/30 (meaning that the insurance company pays for 80% or 70% of the expenses, and you pay the remainder). That means, if you have met your deductible and have a $200 medical bill, you are responsible for $40 of the bill if you have 80/20 coinsurance.
Out-of-Pocket Maximum: There is a cap on how much you have to pay for in-network services over the course of a year to help curb extreme medical expenditures. Always look to see what the maximum amount you would be responsible for if major medical services were required.
Knowing these three definitions can save you time, headache and money along the way.