Unfortunately it didn’t happen while you were rescuing puppies from a burning building. More like when you slipped on the only, tiny patch of ice on the entire sidewalk. But your wrist is throbbing, swelling and in need of a visit to the clinic. As you drive to your appointment, your mind wanders to your wallet: How much is my copay – or is it coinsurance? Have I met my deductible yet? And what am I paying for each month anyway?
These common health insurance terms can look like a foreign language. But when you know what they mean, they tell the story of how you and your health plan share the cost of your care.
How much you pay each month
The amount you pay for your health plan each month, whether you use any care or not, is called a premium. Whether your wrist is broken, sprained or just needs some ice, your monthly premium stays the same. You might pay your monthly cost yourself, your employer might pay it for you or you might share the cost (with your part coming right out of your paycheck). Plans with lower monthly costs usually come with higher costs for care. Plans with higher monthly costs have lower costs for care.
Flat fee for a standard service
The flat fee you pay when you use specific services – like having a doctor take a look at that wrist – is called a copayment, or copay for short. You’ll usually pay the set amount, say $40, at the clinic when you get care. Your copay for different types of care likely appears on your insurance card. Compare these costs when you’re deciding whether to call your doctor’s office for an appointment, swing by an urgent care or convenience clinic on your way home from work or cruise straight to the emergency room.
Your share of your care
For some services, you share the cost with your health plan. Instead of a flat fee like a copay, the percentage of the total cost of your care that you pay is called coinsurance. Say the cost of X-raying, diagnosing and putting a cast on that pesky broken wrist adds up to $1,200. If your plan calls for you to pitch in 20 percent, you can expect a bill for $240. Your plan takes care of the rest.
What you pay before your plan pays
The amount you have to pay yourself, each year, before your plan will pitch in for your care is called a deductible. So if this amount is $500 a year, your plan won’t pay for any of your care until you’ve paid $500 out of your own pocket for things like doctor visits and X-rays (monthly costs, or premiums, don’t count). Let’s say you’ve already paid $300 this year for doctor visits, a few tests and a prescription or two. You’ll pay the first $200 of your wrist-related costs to hit that $500 amount. Then your health plan will help you pay the $1,000 worth of care that’s left.
What you pay for a single family member’s care before your plan pays
If you’re on a family plan, you may have two different amounts you have to pay before your plan starts to help: one for individual family members and one for your whole family’s care combined. The amount for an individual family member is called an embedded deductible, and it can help you save money if one family member has higher medical costs. Once you’ve paid that amount for her care, your plan will help pay for her care for the rest of the year – even if your family combined hasn’t paid enough yet for the plan to start helping.
The most you’ll pay for your care
The absolute most you’ll pay for your care for the year is called the out-of-pocket maximum. Once you’ve paid enough to hit your plan’s out-of-pocket maximum, your plan will pay 100 percent of any other covered care you have for the rest of the year. So if you faced some big health challenges earlier in the year and your broken wrist is just the icing on the cake, you won’t pay a penny if you’ve already hit this ceiling.
Health plans aren't one-size-fits-all and finding a great fit for your family is important. Talk to someone who can help match your unique needs with the plan that suits you best.