*Please note all cost amounts related to the examples below are only for illustration purposes. Prior to any health services, check with your health insurance company.
Co-what? Understanding copays, coinsurance and other common health insurance terms can look like a different language. But, when you know what these mean, they help answer the question of how does health insurance work, showing how you and your health plan share the cost of your health care.
To help you understand your health insurance benefits, UnityPoint Health explains common health insurance terms, as they relate to the following example: you are 64-years-old, and after experiencing years of pain, your provider has recommended surgery.
Premium
The amount you pay for your health insurance coverage each month is called a premium. You pay the same amount each month, whether or not you receive care. In our example, whether you choose to have surgery or not, your monthly premium stays the same. Depending on the type of health insurance you have, you might pay your monthly premium yourself, your employer might pay your premium for you or you might share the cost (with your part coming out of your paycheck.
Out-of-pocket maximum
Out-of-pocket maximum is the most you’ll pay for your health care for the year. Once you’ve reached your health insurance plan’s out-of-pocket maximum for the year, your plan will pay 100 percent of any other covered medical expenses you have for the rest of the year. So, if you faced some big health challenges earlier in the year and you’ve already reached your out-of-pocket maximum, you won’t pay a penny for your surgery.
Copayment (copay)
The flat fee you pay when you use specific services – like a check-up with your provider – is called a copayment, or copay for short.. Your copay is typically different for different types of services, including primary care vs. specialty care. Compare your copay amounts when you’re deciding whether to call your provider’s office for an appointment, stop by an urgent care clinic on your way home from work or visit the emergency room. You pay a copay until you reach your out-of-pocket maximum.
Coinsurance
For some health services, you share the cost of your care with your health insurance plan. What is coinsurance? Coinsurance is the percentage of the total cost of your care you pay. In our example, if the total cost of your surgery is $35,000, your coinsurance is 20 percent and your out-of-pocket maximum is $6,000, then you would pay $6,000 (20 percent coinsurance of a $35,000 surgery is $7,000, although your out-of-pocket max is $6,000). This means your health insurance plan will cover the remaining $29,000, as well as any other medical expenses in the calendar year. You pay coinsurance until you reach your out-of-pocket maximum.
Deductible
Deductible is the amount of care you pay for yourself, each year, before your health insurance plan will start to pitch in for your care. It’s part of your out-of-pocket costs. For example, if your deductible is $3,000 a year, your health insurance plan won’t pay for any of your care, until you’ve paid $3,000 out of your own pocket for things like provider visits and X-rays (premiums don’t count). Let’s say you’ve already paid $500 this year for provider visits, a few tests and a prescription or two. You’ll pay the first $2,500 of your surgery costs to reach the $3,000 amount. You’ll also pay an additional $3,000 to reach your total out-of-pocket maximum of $6,000.
For more questions on your health insurance benefits, talk to your health insurance company. If you are a UnityPoint Health patient, there are billing resources available to you.