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How to Understand Your Health Insurance

By HERWriter
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Understanding Your Health Insurance WavebreakmediaMicro/fotolia

Health insurance is complicated. The terms are confusing and the entire process can be difficult to navigate. Let’s spend some time discussing some basics about health insurance to make it feel less daunting.

First, here are some terms you often hear about your insurance.

1) Premium

The monthly amount you or your employer pays to have health insurance.

2) Deductible

The amount of money you must pay out of your pocket in that year before your health insurance kicks in to help pay your medical bills.

It used to be a deductible of $500 or $1000 was common. Now, due to the high cost of insurance a $2,000 or higher deductible is often used.

3) Co-payment

The amount of money you pay as a flat rate every time you go see a health provider regardless of whether you are also still paying money to meet your deductible. A $50 co-payment to see a specialist is a common amount.

4) Co-insurance

The amount of money your insurance company requires you to pay as your part for a medical procedure or provider visit.

Often your insurance will cover 80 percent of a “reasonable and customary”charge and you pay the 20 percent as your co-insurance.

Reasonable and customary charges are based on what your insurance company has determined is the average cost for a visit or procedure in your geographical location.

5) Out-of-pocket maximum

This is the maximum amount of money you will be expected to pay out of your pocket per year. Your insurance plan should state whether that includes your deductible.

Based on the type of insurance you have, you usually are able to pay less money overall for health care visits if you go to an “in-network” provider versus an “out-of-network” provider.

In-network providers — These are medical providers such as doctors, physical therapists and hospitals that have a written contractual agreement to provide and bill for services at rates your insurance company is willing to pay.

5 Terms Your Health Insurance Uses That May Confuse You. EmpowHER. Retrieved October 22, 2016.

Health Insurance Glossary. Healthinsurance.org. Retrieved October 22, 2016.

Difference between Coinsurance, Deductible, Out-Of-Pocket Limit, Copayment and Premium. Safepol.com. Retrieved October 22, 2016.

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We value and respect our HERWriters' experiences, but everyone is different. Many of our writers are speaking from personal experience, and what's worked for them may not work for you. Their articles are not a substitute for medical advice, although we hope you can gain knowledge from their insight.