If you have a health insurance plan, or you're in the market for insurance, you may be feeling a bit overwhelmed and may be confused by all the terms being used. Copay, deductibles, premiums, coinsurance, individual out-of-pocket, maximum add the fact that many of these can vary widely based on the coverage or plan. And you've got a lot to wrap your mind around in this Blog, we're going to break down a demystify these essential health insurance terms explain how the costs work for both you and the insurance company, and hopefully make you feel a bit more confident about how you're planning works. So let's get started. Sort of. The view from 10000 feet is that there are three levels of health care costs and the higher your cost for the year, the higher up you go level 1 level 2 level 3 on level one, you pay for everything. When your Healthcare expenses get to a certain point, you enter level to where you and your insurance company share the costs.
And if the money you're paying out of pocket hits your plans cap that you enter level 3 where your insurance will cover everything further, we'll Circle back to this at the end, they'll all make a little more sense. Now, whether your health insurance is provided through your employer plan, there's somebody else's employer plan or government-issued plan like Medicare and Medicaid. They all have a set amount for premiums, deductibles, co-pays and coinsurance. These are all terms that represent your out-of-pocket costs. If you don't know what those figures are for your policy, contact your insurance company to request a copy of your policy. Now, just throw a bunch of terms that you let's define these suckers premium.
Think of your premium like a monthly subscription fee, like your Netflix subscription. This is how much you pay each month to keep your insurance active. And you pay this even if you never go to the doctor, just like Netflix. Even if you don't watch anything, you're still paying your subscription, right deductible. Your deductible is the amount specified by your plan that you have to pay in a given year before your insurance pays a dime. For example, if your deductible is set at four thousand dollars, and the bill for your visit to the hospital was two thousand dollars, you have to pay 100% of that bill bummer. But if your deductible is set at four thousand dollars in the hospital, bill is 8000 dollars insurance would kick in to help cover half of that bill. Notice that I said it will help more on that later. The good news is that this is an annual deductible meaning that once you've paid that amount towards cover medical expenses, you don't have to pay it again until your plan resets. Often. This is on January 1st, but that's not always the case. You should check with your insurance provider when shopping for health insurance. It's great to look for a plan with a low deductible over. There is, of course, a trade-off plans that feature a low deductible come with higher monthly premiums while plans withlower monthly premiums have high deductibles. So why choose one over the other? Well, it comes down to what you anticipate. Your usage will be if you usually go for one, maybe two doctors visits per year. You probably want a high deductible with low premiums. These are often referred to as catastrophic coverage plans, because they aren't going to kick in until something really significant or catastrophic happens. On the other hand, if you've visit the hospital a lot, or you have some upcoming procedures, then you probably want to go with a high Premium, low-deductible plan. If you have a health insurance usage history, you can use that to help determine which kind of plan is going to be best for you. Co pay your copay is a set cost that you pay for covered Health Care Service, such as visiting an in-network doctor, a specialist or buying drugs.
Let's say you go to see your doctor who charges $250 for an office visit by your insurance has a copay of $50 for doctor's visits. You pay $50 dollars in your insurance, picks up. The rest will hold on a second how to cope. A is work if I haven't met my deductible yet, because co-pays are paying for some of your medical expenses. Doesn't that not kick in until after you hit your deductible? Well, confusingly, it depends on your policy. So that's something you really want to check on. Here's the tip. Your insurance will likely have a list of preventive care benefits that they'll cover at 100%. No copay, no deductible, no coinsurance. These often include vaccines and many types of screenings. So take advantage of those coinsurance. Remember when I said that insurance would help cover costs that exceed your deductible? That's where coinsurance comes in. Coinsurance is a shared cost between you and the insurance company. So depending on your policy, it may say that after your deductible, you pay 20% and your insurance company pays 80% that's called an 80/20 policy. Now for the ease of math, let's say you have a 50/50 policy with a four thousand dollar deductible, and you just had an eight thousand dollar ER visit you the first four thousand dollars to meet your deductible. And then the second four thousand dollars would be split 50/50, meaning you pay 2002 that. So for that eight thousand dollar ER visit, you'd be out six thousand dollars individual out-of-pocket. Maximum out-of-pocket is the amount of money that you pay. This includes your co-pays, doctor's visits, coinsurance, deductibles, drugs and the out-of-pocket maximum is your plans cap on how much you have to personally pay towards your health care costs. After you hit that maximum 100 percent is covered by your insurance family out of pocket max. Based on what individual yearly out of pocket is. You can probably guess this one. It's the cap on the medical cost for a whole family. Now let's bring back the three levels example from the beginning. Now you start on level one paying basically everything out of pocket that is, until you reach your deductible. And that's when you go to level 2. And that's where you're splitting the cost with your insurance company through coinsurance. If your medical expenses get so high that the total of what you paid reaches your yearly out-of-pocket maximum, you move to level 3 we're all further health care expenses for the rest of the year are 100% covered by your insurance plan. When your plan to reset for the year, you start back at the beginning. Usually this happens on January 1st, but some plans differ on their reset date.
