Health Insurance Deductibles & How They Work

Deciding which health insurance plan to get can be confusing and difficult. Here we explore common health insurance terms and how they relate to common terms in your health insurance plan.

Deductibles

The deductible on your health insurance plan is a specific amount that you must pay directly to your healthcare provider before the insurance plan begins paying the medical costs. With most policies renewing every year, your deductible amount also resets at this stage and you have to pay your deductibles till it is fulfilled. 

Premiums

Your health insurance premium is a monthly amount that you pay regularly to your insurance provider to ensure coverage under the plan depending on the number of people in your plan and the extent of coverage. In the case of deductibles, you do not have to pay any deductibles in the case that you are not using your health insurance plan. It comes into the picture when you incur medical costs and is to be paid directly to your health insurance provider before your insurance plan begins paying for your healthcare expenses.

Copays

Copayments are an expense you incur, that are a part of the health insurance claim, every time you use your health insurance plan. They are usually a fixed, modest amount depending on your insurance plan. In some cases, they can be a fixed percentage, depending on the amount your insurance will be charged. They can also vary in the case that you use a provider that is outside your insurance provider’s approved network.

Coinsurance

Coinsurance is a percentage based limit on the amount of medical costs that your health insurance plan covers with you paying the remaining expenses. They usually range between 20 to 40 percent of the medical costs as the cost to the individual. You begin paying coinsurance only once the deductible amount is reached. The coinsurance percentage can also vary in the case that you use a provider that is outside your insurance provider’s approved network.

Out-of-Pocket Maximum

Out-of-pocket maximums are the maximum amount that you will pay during the length of the policy period, including your deductible, copayments, and coinsurance after which your insurance will pay 100 percent of your medical expenses. It usually excludes premiums and any out-of-network provider expenses and is typically a very high amount.

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