A crash course in 5 important health insurance terms

As if you didn’t already have enough to think about, you need to understand a sea of insurance concepts to keep your health care costs down. Here are five terms you should definitely know.

1. Premium—what you have to pay each month for your health insurance.
   • If you have Medicare and are receiving Social Security benefits, the government will take your Part B premium out of your Social Security check—nothing to think about there.  But, if you have Part D drug coverage, you’ll likely have to pay that premium by check directly to the insurance company.  And, if you’re buying your own supplemental insurance, you’ll need to pay that premium as well.
   • If you’re in a Medicare Advantage plan, you’ll probably need to pay an additional premium to the insurance company offering that plan.
   • If you have coverage through the Affordable Care Act (ACA), you’ll have to pay that premium but may be eligible for a government subsidy based on your income.  Use this tool from the Kaiser Family Foundation to calculate the amount of your premium that the government will pay for.
2. Deductible—what you have to pay out-of-pocket for your care before the insurance starts paying. 
   • If you have traditional Medicare, there is a small deductible for your Part B coverage for medical services and a large hospital deductible as well, both of which you’ll have to pay unless your supplemental coverage picks those up.
   • If you’re in a Medicare Advantage plan, an ACA plan, or an employer HMO or PPO, you’ll need to check on deductibles.  Often, insurers charge a deductible for in-network care and a separate deductible for out-of-network care.  And, if you’re premium is very low, your deductibles could be very high.
3. Copay—a fixed fee that you pay for a particular service.
   • If you’re in a Medicare Advantage plan or an ACA or employer plan and seeing an in-network doctor, your copay will be a set amount of money that represents your share of the doctor’s charge.
4. Coinsurance—a fixed percentage that you pay, based on the amount your insurer pays. 
   • If you have traditional Medicare and supplemental insurance, the supplemental insurer will pick up the coinsurance for all the services it covers.
   • If you are in a Medicare Advantage plan or an ACA or employer plan and seeing an  out-of-network doctor, your coinsurance will be a percentage of the doctor’s bill.
5. Covered services: Insurers only pay for the services they cover.  Before you see a doctor, go to a hospital or use an ambulance, check to make sure that the insurer covers services from those providers and under what conditions.
   • Traditional Medicare covers services from most doctors and hospitals anywhere in America.
   • But, if you are in a Medicare Advantage plan or an ACA HMO or PPO, your coverage for routine care may be limited to your providers in your community. Sometimes, you will need prior approval from the insurer or a referral from your doctor in order for your services to be covered.

If you like this, you might like these:
Many Americans do not have a good understanding of how their health insurance works 
How to keep your out-of-pocket costs down if your income is low and you have Medicare
How to choose between traditional Medicare and a private Medicare Advantage plan
What’s your Medicare Part B premium and deductible?
What’s your Medicare Part A deductible?