ELI5. Please explain all that health insurance language. It’s so confusing…AHHHH



I’m trying to sign up for health insurance. And I don’t understand at all what are monthly premiums, out-of-pocket costs, deductibles, and any other lingo. Can anyone PLEASE explain this to me like you would to a 5 y/o?

In: Other

Premiums is what you pay every month(or year) regardless of if you go to the doctor or not. A deductible is an amount you have to pay for insurance starts paying anything. Some times they will pay 20% or something like that before you hit your deductible, or you may just have to worry about co-pays. Once you hit your deductible insurance starts paying or pays more. For me, insurance pays 80+% after I hit my deductible. I also have an out of pocket maximum, where insurance will pay 100% after I reach that. Out of pocket costs are just whatever you have to pay that insurance doesn’t, like copays or the 20% leftover from my example.

Premiums are how much you pay monthly, even if you don’t go to the Dr.

Deductible is how much you must pay out of pocket before insurance coverage starts

Co pay, is how much you pay for each visit, regardless of what’s covered

Out of pocket cost is the share of the bill that you owe.

Max out of pocket is the largest amount you’ll pay, before the plan covers everything at 100%

Monthly Premiums: what you pay to have health insurance. Call it, the cost of doing business.

Out of Pocket Expenses: what you pay before you meet your deductible

Deductible: the predetermined amount of money you must pay the medical provider until your insurance begins paying

Co-Pay: The portion of the fee for seeing the provider. Your health insurance will be billed for the rest.

Coinsurance: this is different than a Co-Pay. Say your doctor’s visit for whatever, cost $500. Your insurance will pay, for example 80% of that $500, and you pay the remaining 20%. So your insurance paid $400 and you paid $100.

Typically, Co-insurance goes towards your out of pocket and deductible costs. Co-insurance is also typically used by PPOs and Co-Pays are for HMOs.

PPO: Preferred Provider Organization. Basically creates a larger network of covered providers and services. You pay less for being in their service range

HMO: Health Maintenance Organization. Basically means that only providers contracted with the HMO Plan can be used, but also MUCH cheaper when using those providers.

Hope that helped!

Monthly premium is the bill you pay to the insurance company each month. When you go to the doctor you will pay a co pay (set amount) or a percentage of the bill. The deductible is how much you need to pay before they cover the costs. So you might need to pay the first $500 at visits and then the insurance starts paying their part. All these vary but normally the higher the monthly payments the lower your deductible and copays will be. Paying less per month means you will have a higher deductible. If you are healthy and rarely need the dr a high deductible is more ok because the chance you will need it is low and you will save on the monthly costs. If you are someone who gets sick frequently or has an ongoing health issue, it is often better to pay more monthly to avoid the big deductible. Weigh the different options of how much you expect to use the insurance and how much you would pay for each option.

Monthly premiums are the amount you have to pay, typically deducted from your paycheck, to access the medical benefits. If it is not paid then you no longer have the benefits. Your deductible is the total amount of money you have to pay before the insurance pays any amount. Once your deductible is met, then you have coinsurance or a percentage that the insurance pays. An example would be an 80%/20% split where the insurance pays the 80% and you pay the 20%. The other out of pocket cost would be co-pays. That is a flat dollar amount that you pay per service that does not apply to the deductible, but does apply to the out of pocket maximum. Your out of pocket maximum is the total amount you will have to pay until the insurance will cover 100% of the cost. This includes your deductible, co-pays, and coinsurance, but does not include your premium. Also, please note that the out of pocket maximum for your medical coverage may or may not include any prescription costs and 100% is really only guaranteed if it is an in-network provider.

I work in dental, so the insurance part is a little different.. but this is a good tip.

Your insurance says they will pay 80% for a specific procedure. Ex. A filling. However the insurance will pay 80% of their “allowed amount” and the unpaid balance is the patients responsibility.

Some dental offices will charge $100 and others will charge $500 for the same filling, same technique. But your insurance may have a maximum allowed amount for this specific procedure at $80. Meaning they will only cover up to $80 for this procedure.

So if you go to $100 filling office, after deductible, your patient portion for the filling is $20.

But if you go to $500 filling office, after deductible, your patient portion would be $420.

My advice is to always preauthorize your treatment. This means your provider will submit a request to get these services covered and that way you know beforehand what they will cover exactly.

Go to an in network provider ALWAYS

And get second opinions.

Rule 2.

r/healthinsurance might know better.

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