Health Insurance Overview

In the simplest form, health insurance is a product that provides coverage for medical expenses. Services from preventive care up to doctors’ visits and emergencies are all covered under health insurance. Even though some of the costs are covered, there will still be a remaining balance paid for medical care. This is often referred to as your out-of-pocket expenses. With most plans, you will have a limit to what you can be charged in a given year called your out-of-pocket limit. Once you break this threshold, then your portion of the expenses drops to zero.

When paying for health insurance, you will normally see costs come in the form of either premiums, deductibles, copayments, or coinsurance. Below is a breakdown of these costs and the reason they are being charged:

• Premium – Monthly bill that is charged to you in return for access to a health insurance plan. Typically, the lower the premium payment, the more you may have to pay in out-of-pocket expenses.
• Deductible – Often seen as the amount you need to pay for medical services out-of-pocket before health insurance kicks in. Even after you meet the deductible, it is still likely that you will be responsible for paying copays and coinsurance until reaching the out-of-pocket max.
• Copayment – Usually billed to you in the form of a fixed amount for a specified service or medication. These expenses will be required until you reach the maximum out-of-pocket amount.
• Coinsurance – Dissimilar to copayments, coinsurance isn’t a fixed rate and is charged at a percentage of the cost for services.