Health insurance can be complicated, but you don’t have to figure it out alone. Understanding the terms and definitions is important when comparing healthcare plans, choosing the right plan and making the most out of your benefits.
Let’s be honest, health insurance isn’t the most exciting topic, but when you know more about it, it can be much easier to make the right choice for you and your loved ones. A common question when it comes to health insurance is, “Who pays for what?”
Health insurance plans are very diverse and depending on your plan, you can have different types of cost-sharing — the cost of a medical visit or procedure an insured person shares with their insurance company.
Two common examples of cost-sharing are co-pays and co-insurance. You’ve likely heard both terms, but what are they and how are they different?
These are typically a fixed dollar amount the insured person pays for their visit or procedure. They are a standard part of many health insurance plans and are usually collected for services like doctor visits or prescription drugs.
For example: You go to the doctor because you are feeling sick. Your insurance policy states you have a $20 co-pay for doctor office visits. You pay your $20 co-pay at the time of service and see the doctor.
This is typically a percentage of the total cost of the visit or procedure. Like co-pays, co-insurance is a standard form of cost-sharing found in many insurance plans.
Here’s an example of co-insurance: After a fall, you require crutches while your leg heals. Your co-insurance for durable medical equipment like crutches is 20% of the cost. The crutches cost $50, so your insurance company will pay $40 or 80% of the cost, and you will be billed $10 for your 20% co-insurance.
Understanding the difference between co-pays and co-insurance is important when comparing health insurance plans. Remember that a co-pay is a fixed dollar amount, and co-insurance is a percentage of the total cost.
Health Insurance Agents
Clearly, health insurance is complicated. That’s why if you are looking for health insurance for yourself or your employees, you should put a licensed health insurance agent to work for you. The National Association of Health Underwriters is a good place to start. They have a “Find an Agent” tool that can help you find a reputable health insurance agent in your area.