Health care basics: Understanding the lingo

The process to find a health plan that’s right for you may be daunting, especially when it comes to cost-conscious or first-time insurance shoppers. That’s why understanding the key concepts that make up your plan is important.

Here’s a quick guide to help you decode some of the most common terms. 

Premium: This is the amount you and/or your employer must pay for your health insurance or plan every month, quarter or year. 

Covered service or expense: The portion of a medical, dental or vision expense that your health insurance or plan has agreed to pay for or reimburse.

Deductible: This is the amount you could owe during a coverage period (usually one year) for covered health care services before your plan begins to pay. An overall deductible applies to all or almost all covered items and services. A plan with an overall deductible may also have separate deductibles that apply to specific services or groups of services. 

Coinsurance: This is your share of the costs of a covered health care service, calculated as a percentage of the allowed amount for the service. You generally pay coinsurance plus any deductibles you owe.

Copay: This is the fixed amount you pay for a covered health care service. After you’ve reached your out-of-pocket limit, the copayment is not charged. 

Annual out-of-pocket limit: This is the most money you would have to pay for covered expenses in a plan year. 

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