Common Health Insurance Terms

Deductible
For private insurance, the annual deductible is the amount paid each year before the insurance company starts paying its share of the costs.

• If the deductible for the plan is $1,000, the individual or family must pay $1,000 in health care expenses during the plan year before the insurance company will begin covering its share.
• In most plans, preventive care services are covered at 100% and do not require the family to meet the annual deductible prior to receiving preventive care.

Co-pay
A co-pay, or co-payment, is the fixed amount paid at each visit to a care provider or for each prescription filled. Not all plans require co-pays. Co-pays may vary for primary care visits, specialty visits, or type of prescription filled.

• Preventive services are usually paid at 100% and do not require a co-pay.
• Typically, co-pays do not count towards the annual deductible but are included in the out-of-pocket maximums.
• According to a 2017 Kaiser Family Foundation report, the average co-pays are $25 for primary care office visits and $38 for specialty care office visits.

Co-insurance
The co-insurance is the percentage paid for certain medical expenses after the deductible is met. An insurance company pays a portion of care expenses. The family is responsible for the remaining amount.

• If an MRI costs $1,000, the insurance company may cover 80% or $800. The family is responsible for paying the remaining 20%, or $200 after the deductible is met.

Out-of-pocket maximum
The out-of-pocket maximum is the maximum amount paid each year for covered medical expenses. It may be calculated separately for individual and family insurance coverages.

• After the out-of-pocket maximum amount, the insurance company will cover 100% of the covered medical expenses for the remainder of the plan year. The out-of-pockets maximums may be the same or different for the medical and prescription drug coverage depending on the insurance plan.

Plan documents
These documents include Summary Plan Descriptions (SPD) or Evidence of Coverage (EOC) or Summary of Benefits Coverage (SBC)

• The plan documents tell the family about the benefits they are entitled to under the insurance plan, and provide rules on how to use the plan.
• To receive coverage, the family must follow any plan rules. Every insurance plan has their own governing rules such as obtaining required referrals from the primary care physician to see a specialist or checking with the insurance company for prior authorization.
• Review your own plan documents to understand the specific rules of your policy.

In-network provider
The insurance network is the group of doctors, hospitals, pharmacies, and other health care providers that the insurance company contracts with to provide services.

• Many plans specify costs based on whether a provider is in the network. Usually, it is less expensive for services received in-network.

Out-of-network provider
If a provider is not in a specific network, the insurance company may not pay for the services provided. Or the family may pay more for the services. Understanding which providers are included in your health plan’s network of providers will minimize surprise expenses.

• For example, an in-network MRI may be 80% paid as opposed to 40% paid for out-of-network. The annual deductible may also be higher for out-of-network services.

Monthly premiums
A premium is the amount the family pays each month for health coverage. If the family has a plan with lower monthly premiums, they will likely pay more for health expenses before the insurance starts sharing costs. Plans with higher monthly premiums usually mean lower out-of-pocket expenses.

Consider all potential out-of-pocket costs when reviewing health insurance options.

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