Understanding Health Insurance Plans by Cost and Coverage

A diverse team of professionals conducting a discussion on health insurance plans, emphasizing the importance of cost and coverage.

If you feel lost when faced with insurance terminology or could benefit from an overview of the most critical components of an individual health insurance plan, rest assured you’re not alone. Understanding the cost and coverage details as they pertain to health insurance can help you make an informed decision when it comes time to select a plan.

Let’s First Brush Up on Some Terminology

All of these terms describe costs you can expect to pay in a given year for individual health insurance. It’s crucial to be familiar with the specifics of your health insurance coverage, that way you aren’t caught off guard by out-of-pocket costs or other unexpected expenses throughout the course of a year.

  • Premium – the monthly payment you submit to your insurance company.
  • Deductible – the set amount you’re responsible for paying until the insurer begins to pay their share. For example, if you have a $1,000 deductible, you must pay that in full before your provider will start to pay.
  • Copayment (Copay) – the fixed amount you pay each time you have a prescription filled or visit the doctor’s office. Not all insurance plans have copayments, and the ones that do typically don’t count toward the deductible.
  • Coinsurance – just as the prefix “co-“ implies, this is a cost shared between you and your insurance provider. Not all plans include coinsurance, so make sure to check on this when comparing and contrasting various options.
  • Out-of-Pocket Maximum – the absolute most you will be required to pay for any and all medical expenses in a given year (after meeting your deductible, coinsurance, etc.) before your insurer steps in and assumes responsibility for any medical expenses you incur the rest of the year.

How to Determine Which Type of Coverage Is Best for You

While you can’t foresee the unexpected, such as freak accidents or illnesses/conditions that arise out of the blue, if everything goes according to plan you can generally come up with a rough estimate as to how much care you’re going to need in a given year. Having this estimate in mind when evaluating health insurance plans should help you select the one that will best fit your budget and coverage needs.

If You Don’t Anticipate Having to Use A Lot of Care During the Upcoming Year …

A plan with a lower monthly premium and higher deductible may provide the best of both worlds. While you’ll face higher costs when you do receive care, you’ll benefit from significantly lower payments each month. As long as you don’t need to frequently visit the doctor or require monthly prescriptions, this may be the best option for you.

To illustrate just how much you could be saving with a low-premium, high-deductible plan, consider that in 2015 the average individual with this type of plan saved $636 in monthly premium costs alone.

If You Do Anticipate Having to Visit the Doctor on a Regular Basis …

A plan with a higher monthly premium and lower deductible may better fit your needs. Although you’ll pay more each month, if you go to the doctor frequently you’ll benefit from lower copays, coinsurance, deductibles and out-of-pocket limits, which should save you money in the long run (so long as you’re truly receiving care on a regular basis, otherwise it may end up costing more).

Why It’s So Imperative to Have Adequate Health Insurance Coverage

Nobody plans or has the ability to foresee themselves getting sick or hurt, but over the years odds are you’re going to need some type of medical care. Without individual health insurance, you run the risk of facing incredibly high costs for medical services and also miss out on the array of benefits that go along with being covered.

To learn more about the numerous benefits of having adequate health coverage or to speak with a specialist about which plan will best meet your cost and coverage needs, contact us today. We’ll be happy to provide you with a free health insurance quote from all of our carriers at once!

Frequently Asked Questions

What is the premium in an individual health insurance plan?

A premium is the monthly payment submitted to the insurance company.

Define deductible in relation to health insurance.

The deductible is the set amount you must pay before the insurer starts covering their share. For instance, with a $1,000 deductible, you need to pay that amount before coverage begins.

What does the term “copayment” or “copay” signify in insurance?

A copayment (copay) is a fixed amount you pay each time you get a prescription filled or visit the doctor’s office. Not all plans include copayments, and they usually don’t count towards the deductible.

What is coinsurance in the context of health insurance?

Coinsurance is a shared cost between you and your insurance provider. It’s a term that indicates a cost split. Some plans include coinsurance, so it’s important to check when comparing options

What does “Out-of-Pocket Maximum” mean in health insurance?

The Out-of-Pocket Maximum is the highest amount you’ll have to pay for medical expenses in a given year after you’ve met your deductible, coinsurance, etc. Once you reach this maximum, your insurer takes over the remaining expenses for the rest of the year.

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