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?
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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!
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