Choosing a health insurance plan is a crucial component of living a balanced life. Health insurance helps us to be prepared for the unexpected, whether it’s a broken leg from a fall during a hike or a global pandemic. Despite our best efforts to stay healthy, we often find ourselves needing medical care. Understanding the various terms associated with health insurance plans can help people make the best decisions for themselves and their families to prepare for an emergency. Knowing the difference between deductibles, co-insurance, and copays is essential when making such significant decisions.
A deductible is the amount of money that an insured person (or family) pays, per year, for eligible medical services and medication before their health insurance plan starting to share the costs. For example, if your plan comes with a $3,500 deductible, this means that you will cover the costs yourself for the first $3,500 of care that you require each year. A variety of services might be counted toward reaching the deductible, including (but not limited to) surgery, lab tests, hospitalizations, and medical devices. After you reach your deductible amount, your insurance plan will then start to pay for care.
After your deductible has been met, co-insurance becomes a factor in paying for your medical care. Simply put, co-insurance is the percentage portion of your medical cost that you must pay. For example, perhaps your co-insurance rate is 30%. This means that, for covered medical expenses, you will pay 30%, and your insurance company will pay the remaining 70%. If you require an x-ray of your lower back that costs $1,000, your portion of the x-ray cost will be $300 (and the insurance company will pay the remaining $700).
Copays are set fees that you pay each time you visit the doctor or get a prescription filled. For example, perhaps it costs $25 to see your primary care physician about an earache, $40 to see a specialist regarding an autoimmune disorder and $15 per prescription. Depending on your plan, copays might (or might not) count toward your deductible, and not all services might have a copay. As with all things, it is essential to read the fine print and understand the terms of your health insurance plan before seeking needed medical care.