When choosing your health insurance plan, you must make sure that the doctors are within the medical network. But to find the most affordable plan, you must pay attention to these two things:
1. Deductible, and how high or low they are,
2. Co-insurance, and if they are reasonable.
But what is deductible? What is coinsurance? Don’t be intimidated or confused by these words! Let’s take a look at the figure below to clarify the definitions. (Click to enlarge)
Some insurance plans have a deductible, which means that the insured will be paying out-of-pocket and must pay up to a certain amount of medical expenses themselves before the insurance company can start to cover your medical expenses. Deductible is calculated annually and the insured will have to pay this amount every year. Typically, the higher the deductible, the lower the premium.
Some people feel that they’re pretty healthy so they choose a high deductible plan to save money. You should still calculate your own finances before deciding because if an accident happens, you want to make sure you’ll be able to afford your high deductible.
Copay vs. Coinsurance
After the insured reaches the deductible, the insurance company will pay for most of the medical expenses for the insured. The insured will only need to pay the copay or coinsurance.
Copay is a fixed amount you pay for a service such as going to see the doctor or getting medication. The amount varies by service and depending on what health insurance plan you have.
Coinsurance is a share of costs that you will pay for a service. You will usually pay 15-30% percent of the charged amount of the service.
To put it in simple terms, deductible, copay, and coinsurance are not fixed amounts. The more you see a doctor, the more out-of-pocket expenses you will have to pay.
After the implementation of Obamacare, every plan has a maximum they cannot pass to prevent the medical fees from being too high, and this is called the out-of-pocket limit. Once you reach the out-of-pocket limit, the insurance company will cover 100% of your medical fees.