Selecting health insurance can be extremely confusing, especially if there are a large number of plans to select from. It can be tempting to go with the plan with the lowest monthly premium, but this can end up costing you a lot of money when you actually try to use the insurance. Since the terminology is often what trips individuals up the most when applying for health insurance, the following are some common terms that are used with a little clarification about what it all means.
- Premium – This is the amount of money that the policy holder will pay each month in order to keep the policy active. If the monthly premium is not paid, the policy will lapse.
- Deductible – Deductibles are the amount that must be paid before the insurance company will begin to cover the cost of services. Deductibles may vary widely, but generally have a direct influence on the cost of the premium: low premium=high deductible; high premium=low deductible. Certain services are often covered outside of the deductible, such as preventative care and doctor visits.
- Copay – A copay is the amount that the policyholder is required to pay in order to receive certain services. Copays are usually specified in the details of the policy, as there may be different copays for doctor visits, emergency room visits, and specialist visits.
- Coinsurance – Coinsurance is often assessed as a percentage that is owed for services after the deductible is met. Some plans may offer coinsurance instead of copays for services. The premiums for these plans are generally cheaper than plans with copays, as the out of pocket expenses tend to be higher.
- In-Network – Most insurance plans are only accepted by certain providers. The providers that accept the insurance are considered in-network. If a policyholder goes to a health care provider that is out-of-network, the insurance will not cover the cost of services. Certain exceptions may be made for emergency situations.
- Out of Pocket Maximum – Most health insurance plans will begin covering all medical expenses that exceed a specified out of pocket amount during the course of a covered year. Out of pocket maximums are generally very high for plans with low premiums and lower for plans with higher premiums.
- Waiting Period – If insurance is obtained through an employer, some health insurance providers specify a certain amount of time that the employee must stay with the company before they are eligible for insurance.