Understanding Health Insurance: Top 5 Terms to Know

Friday, October 14, 2016 - 11:38am

Enrolling in health care is complicated, and a little knowledge can go a long way in helping you choose the best plan for your current and future medical needs. Understanding industry terms like premiums, deductibles and coinsurance, will simplify the process and make you a savvy consumer.

Here are the words you need to know to make a smart and informed decision:

Deductible

A health insurance deductible is one of the first things you’ll want to look at when shopping for a policy. It’s the amount you have to pay for covered services before the plan kicks in. It’s also important to know that premiums and copays don’t count toward your deductible.

Premium

The health insurance premium is the amount you pay for your plan each month.

Copayment

A copayment is a fixed amount that you pay for a particular service. For example, your plan might have a $20 copay every time you visit your primary care doctor, and a $40 copay when you visit a specialist. The advantage of a copay is that there’s no surprise about how much a service will cost you. You know exactly how much you’ll owe before you even make the appointment.

Coinsurance

With coinsurance, you pay a percentage of the cost of a health care service (usually after you've met your deductible) and you only have to continue paying coinsurance until you've met your plan's maximum out-of-pocket for the year. For example, if your plan comes with a 20 percent coinsurance, you pay 20 percent of the cost, and your health insurer pays the other 80 percent. That means if the plan allows $200 for an office visit, your share will be $40, providing you’ve met your deductible. Coinsurance can be riskier since you won’t know exactly how much you’ll owe until the service is performed. You don’t usually have to pay both a copay and coinsurance on the same health care service.

In-Network | Out-of-Network

When a provider is in-network it is contracted with the insurance plan to provide services to its members. An out-of-network provider is not contracted with the insurance plan. If you receive services from a provider that is in-network, your out-of-pocket costs will typically be less than if you receive services from an out-of-network provider. Services provided by out-of-network providers may not be covered under your plan.

If you need help, Roswell Park's financial counselors are ready to assist you with any of your health insurance questions. Ask a question online, call 1-800-ROSWELL (1-800-767-9355).