When it comes to health insurance, you have probably heard terms like deductible, copay or coinsurance thrown around. What does it all mean? Cutting through the clutter of health insurance can be a challenge, but it’s important to do to make sure you have access to the treatments and services you and your family need.
Watch our Health Insurance 101 video for a quick refresher:
Whether your insurance comes from your employer, a health insurance exchange or shop on your own, we’re about to enter open enrollment season. This is the time to evaluate your coverage and make decisions and changes that work for you.
Make sure you know the questions to ask about coverage and about how insurance covers your medicines. Remember, just because you have coverage that doesn’t mean your plan pays 100 percent of your expenses. Understanding the out-of-pocket costs you may face, especially for the medicines you need, is important in choosing a plan. Here are some of the terms to know:
- Deductible: the amount patients must pay annually with their own money (out of pocket) before a health plan will pay for any expenses. This amount does not include premiums. For example, if a deductible is $1,000, the health plan won’t pay for most services until a patient pays $1,000 out of pocket. Sometimes plans exempt certain costs, such as some or all prescription drugs, from the deductible. In most cases, preventative services are covered with no cost sharing even if you have not reached your deductible.
- Copay: a copay is a fixed amount – or flat fee – a patient is responsible for paying with his or her own money (out of pocket) for certain services or medicines. Plans specify what this amount will be for a variety of health-related services, such as a doctor or specialist visit, emergency room visit or prescription medications. Copays are determined by health insurance plans and are often printed on health insurance cards.
- Coinsurance: a percentage of costs a patient is responsible for paying with his or her own money (out of pocket). Plans specify what this percentage will be for a variety of health-related services, such as a specialist visit, emergency room visit or prescription medications. Because coinsurance is a percentage of total costs, it can be difficult to estimate and plan for in advance.
Allyson Funk Ally is a former senior director of public affairs at PhRMA focused on advocacy issues for the biopharmaceutical industry. Her expertise includes Medicare, Medicaid, 340B, health reform and more. Prior to PhRMA, her experience includes leading health communications for a large membership organization, supporting public affairs clients and working for the governor of Louisiana.