What’s a Deductible? A Quick Guide to Common Health Insurance Lingo

A healthy lifestyle ideally includes health insurance to protect your bank account from expenses related to an unexpected illness or hospital stay.

While having it is half the battle, understanding it is the next step in making sure it’s working hard for your health. Since helping you pay your medical bills is the main point of having insurance, here are simple definitions for four factors included in your plan that impact when and how much you’ll pay after receiving care:

  • Did someone say deductible? We started here because you’ll need to pay this amount in full before your health insurance begins to pay. Electing to pay higher premiums, the monthly charges you pay to have health insurance, is one way to lower the amount of your deductible.
  • Coinsurance cost-sharing: Once you’ve fully paid your deductible, coinsurance kicks in. Basically, you’re still responsible for some costs, but your health insurer will start picking up a portion of the tab, usually figured as a percentage of the total charge for service. Typically, the lower a plan’s monthly payments, the more you’ll pay in coinsurance
  • Copays are fixed dollar amounts you would pay for a health care service, such as a doctor’s appointment or covered prescription. They work a lot like coinsurance, except that your cost is a fixed dollar amount, pre-determined and set by your plan. If you visit your doctor or pharmacy often, you’ll want a plan with a low copay for those services.
  • The out-of-pocket maximum is the most you’ll be required to pay out-of-pocket for health expenses. This means that all the money you pay toward your plan’s deductible, and for coinsurance and copays, go toward your out-of-pocket max. Premium payments do not count toward this amount.

If you aren’t sure how much your deductible, coinsurance percentage, copay amounts, or maximum out-of-pocket costs are, you can ask your insurance provider for a Summary of Benefits and Coverage plan explanation that will outline those details for you. If you’re a BCBSM or BCN member, you can find that information at bcbsm.com.

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