Health insurance is complicated to understand. Policies come in a wide variety of shapes, sizes, colors and flavors and they all seem to be designed to confuse the average consumer. If you are interested in upping your health insurance savvy, there are a few terms that you need to know before signing up for a policy – or even before making changing to an existing policy.
Your deductible is the amount you are responsible for paying before your insurance picks up the rest of your tab. Deductibles range from as little as $200 to as much as $10,000, depending on the policy and coverage you select. Even with full coverage, dependence on a policy does not guarantee your insurance carrier will pick up all the bill once you have met your deductible. Some insurance carriers even have separate deductibles for individuals as well as a family deductible on a larger policy. Make sure you understand the deductible costs and limits before biting off more than you can chew with your healthcare.
Co-insurance is a term often seen once your deductible is met. Some policies will have a 60/40 co-insurance percentage, others will have a 80/20 co-insurance split and still others will set splits based on their internal company policy. With these, whenever you are hospitalized or in need of specialized services, your insurance will pay the first (usually the higher) number as a percentage, and you are responsible for the lower number. For example, on an 80/20 split, your insurance provider would pay 80 percent of your coverage, and you would be responsible for 20 percent. Again, this can be found in the fine print of your policy.
Co-payments are the pre-contracted amounts you pay when you go to the doctor, and these also vary from one insurance carrier to another. Generally, your co-payment is listed on your card, and whatever you pay for services rendered as a co-payment is credited toward your deductible.
Out-of-pocket expenses are expenses covered entirely by you, not allowable, admissible or covered by your insurance company. Out-of-pocket expenses are also referred to as co-payments, deductibles or coinsurance premiums. However, all of these payments are over and above your deductible, which is a separate out-of-pocket expense.
Some insurance carriers set limits on how much they will pay for any one (or more) ailments for your entire life. However, it is important to note that just like deductibles; some insurance providers will separate the life time maximums for family and individual coverage.
Some insurance carriers will cover conditions you have had in the past, others will not. It is important to report your information accurately to your insurance carrier so that you know what they will and will not cover before selecting a policy, especially if you have a chronic aliment like arthritis, glaucoma or even cancer.
Not all health insurance policies go into effect the day you sign up for service, or even the day that the insurer decides to cover you. Some policies make patients wait 30, 60 or even as long as 90 days before coverage kicks in. Make sure you know whether or not there are waiting periods in regard to your policy. This way you don’t find yourself at the doctor’s office without any coverage at all, and because your coverage has not gone into effect yet.
While insurance policies come with many more terms, and a whole lot more fine print, knowing some of the basics will help you navigate the muddy waters of selecting the insurance coverage that is the best fit for you.