The beginning of the new year often means a new insurance plan for many people, both in Medicare and in private or Marketplace plans and with the new year, a new deductible. And new copays, coinsurance, out-of-pocket maximums, and premiums. Here are the definitions of what these terms mean and examples of how they affect you.
Deductible:
Definition: The amount of money you must pay out of your own pocket for covered healthcare services before your insurance plan starts contributing. Some expenses can be exempt from the deductible, like doctor copays or tier 1 and/or 2 generic medications.
Example: If your plan has a $1,000 deductible, you pay the first $1,000 of covered medical expenses, and then your insurance coverage begins.
Copay:
Definition: A fixed amount you pay for a covered healthcare service, usually due at the time of service.
Example: You might have a $20 copay for each doctor's visit, meaning you pay $20, and your insurance covers the rest of the cost.
Coinsurance:
Definition: The percentage of costs of a covered healthcare service that you're required to pay after you've paid your plan's deductible.
Example: If your plan has a 20% coinsurance, you pay 20% of the covered medical expenses, and your insurance covers the remaining 80%.
Out-of-Pocket Maximum:
Definition: The most you have to pay for covered services in a plan year which I most often a calendar year. After reaching this limit, your insurance plan typically covers 100% of covered expenses.
Example: If your out-of-pocket maximum is $5,000, once you've paid $5,000 in deductibles, copays, and coinsurance, your insurance covers all additional covered costs for the rest of the plan year.
Premium:
Definition: The amount you pay for your health insurance plan, usually on a monthly basis.
Example: If your monthly premium is $300, you pay $300 each month to maintain your health insurance coverage.
Understanding these terms can help you navigate your health insurance plan and make informed decisions about your healthcare expenses. At MCG, we help you analyze all of the variables in the plans available in your area and for your specific needs and those of your family.
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