When electing health insurance coverage, it is important to understand plan requirements and related terminology.
A premium is the amount you pay for health insurance each month to keep your policy active, and you continue to pay your premium even after reaching your deductible. Paying your premium allows your health plan to cover portions of your health care expenses (once your deductible is met), as outlined in your insurance policy. When enrolled in employer provided health insurance, your premium typically is deducted from your paychecks.
Your health insurance deductible is the specific amount you must pay before your health insurance will begin to share the cost for covered medical expenses. You will typically be responsible for paying 100% of your medical expenses before you reach your deductible. Routine preventive care may be an exception and could be covered by your insurance without meeting the deductible. Please note, not all health care expenses count toward the deductible. These expenses may include out-of-network services or those not approved by your health plan.
Once your deductible is reached, your insurance will begin to share the cost of medical expenses, though you will still pay copayments and coinsurance as specified in your plan policy.
Copayments, often called copays, are a form of cost sharing. Copays are fixed amounts that you pay for receiving certain covered health care services or medications, and your health insurance covers the remaining portion of the expense. For example, if your copay is $50 for an urgent care visit, your plan will cover any additional costs related to that visit. Please note, copay amounts vary from plan to plan, and some plans do not have any copayments.
It is important to note that coinsurance is different from copayment. Coinsurance is a cost-sharing arrangement that represents the amount of health care costs you are responsible for paying after meeting your deductible. For example, if your coinsurance is 25%, you will pay 25% of covered medical expenses after meeting your deductible, and your health plan will cover the remaining 75%.
Your out-of-pocket maximum is the largest amount of money you are required to pay for covered health care services during your plan year. Once the maximum is reached, your plan will typically cover 100% of your covered, in-network health care costs for the remainder of the plan year. It’s important to note that your maximum will reset at the end of your plan year.
If you have any questions about your health plan and its requirements, please contact our dedicated ESR team for assistance.