Health insurance is complicated but also very valuable. What you pay for health insurance and health care can leave you scratching your head. There are three basic ways you pay:
Premium: This is the amount you must pay regularly to your insurance company. It is like a membership fee. It is very important to pay this amount every month when it is due. If you miss a payment, you could lose your insurance.
Co-Pay: This is the amount you pay when you get a health service. A health service can be anything from a doctor’s visit to picking up prescription medicine. Your co-pay is a set amount broken out by the service type: primary care visit, specialty care visit, medicine, ER or hospital visit, etc. Most co-pays are between $5 and $30 depending on the service. Emergency room and hospital co-pays are more expensive. They could be as high as $300. Your co-pays are listed on your insurance card, if you can’t find them call the member services number to ask for help.
Co-Insurance: This is also an amount you pay when you get a health service. It is a portion of the total cost of the service, not a fixed amount. Your health insurance is sent a bill for the rest of the total cost, but they don’t pay until you have spent down your deductible. If your health insurance doesn’t pay for a service you get the bill.
Co-pay vs Co-insurance: It is easier to know what you pay for health services with co-pay than health services with co-insurance. With a co-pay you pay a fixed amount no matter the cost of the service no matter how much of your deductible is left. With co-insurance you pay a percentage of the total cost.
Deductible: This is the amount you must pay each year before your insurance starts paying. When you receive a health service you will pay the co-pay. That amount is taken off of the full cost of the service and then a bill is sent to your insurance company. If you’ve already met your deductible for the year the insurance company pays the remainder of the bill and that is the end of the story. If you haven’t met your deductible your insurance company will not pay the balance and your health care provider will send you a bill. Your insurance company will keep track of these amounts so they know when you meet your deductible and it is time for them to start paying.
In general, insurance plans with low monthly premiums have high deductibles that you must reach each year before your insurance starts paying. Plans with high premiums have lower deductibles. Remember, your insurance card is your ticket to getting care. Always carry it with you so you have it whenever you need a health service.