The basics of health insurance: numbers you need to know

Shopping for health insurance can be overwhelming. Whether it’s your first time or your annual review, knowing the basics can help you effectively compare plans and find coverage that suits your needs and budget. An easy way to start is by understanding the basics of health insurance costs.

Premiums

The premium is the amount you pay, typically each month, for health insurance. This is a fixed price that won’t change throughout the year.

Premiums can change from year to year, even if you make no changes to your plan or coverage. If you already have an insurance plan, make sure to review your renewal notice each year to see if your premium changes.

Deductibles

The deductible is the amount of money you will be responsible for paying for covered medical expenses before your insurance company will begin to pay. After the deductible is met for the year, you split the costs for covered medical expenses through copays and coinsurance.

Many plans cover routine and preventive care, (like vaccinations, annual physicals, or lab work) without requiring you to meet your deductible first. For these services, you may only have to pay the copay.

Premiums and deductibles are directly related

Plans with higher premiums generally have lower deductibles and vice versa. High deductible health plans (HDHPs) can be paired with a health savings account (HSA) that allows you to deposit pre-tax dollars to pay for qualified medical expenses.

Copays and Coinsurance

There are two ways in which you and your health insurance provider may split the cost of your care: copays and coinsurance. A copay is a fixed fee, while coinsurance is a percentage split. Coinsurance begins after you meet your deductible.

Your health insurance company will detail your copay and coinsurance responsibilities in your Summary of benefits document. Keep in mind that they will vary based on your plan, your provider, and the type of service.

Out-of-Pocket Maximum

An out-of-pocket maximum is the most you’ll have to pay during a policy period (usually a year) before your health insurance plan will pay for 100% of covered services. Premiums do not count toward your out-of-pocket maximum, but deductibles, copays and coinsurance are included.

Get down to the basics with HealthMarkets

Don’t let confusion or lack of information stand in the way of making wise health care choices. Let a licensed insurance agent help you understand the basics, compare available plans, and choose coverage that suits your needs and budget. Call (800) 827-9990, or start comparing plans online today.