When shopping for a health plan, many people quickly get overwhelmed by the process, especially since it is filled with confusing terms that are unfamiliar to many people. Luckily, once you get the hang of the terms in a Massachusetts health plan or a plan for another location, it becomes much easier to understand what the particular one offers you. Below are five key US-based health insurance plans defined:
1. Premium
A premium is how much money you will pay each month, or in some cases, each year to receive the health insurance benefits your policy outlines. Plans with lower premiums tend to cover fewer services and provide less payment help. But these plans are helpful for covering catastrophic events that result in long-term hospitalization or major medical care.
Plans with higher premiums will cost more per month, but they may provide lower-cost services. That can result in overall savings if unforeseen medical circumstances arise.
2. More health insurance plans defined: Deductable
A deductible is an amount you will pay for your medical services and goods before your insurance policy will begin paying some or all of these fees. Plans that have a lower premium often have a higher deductible, so policy owners can expect to pay more for goods and services before their insurance plan kicks in and helps with these costs.
Those who pay a higher premium will likely have a lower deductible, meaning that insurance will help cover the cost of services sooner. Some plans even have a $0 deductible, meaning that insurance will assist with medical costs right away.
3. Out-of-pocket costs
What are out-of-pocket costs? They are what you will have to pay on your own before you meet your deductible. Out-of-pocket costs plans reset at the beginning of each year, so you will have to pay for medical costs out-of-pocket until you meet your deductible again after the first of the year.
These costs can range widely. The prices depend on which type of insurance plan you have and how much you pay in premiums each month.
Related reading: Learn the ins and outs of family health insurance plans in this guide.
4. Maximum out-of-pocket costs
Each health insurance policy will provide a maximum out-of-pocket (MOOP) cost per year, which is a dollar amount that signifies the highest amount you will ever pay on your own within a year. Some plans, typically those with a high premium, will offer a relatively low MOOP, whereas those with a lower monthly premium will have a higher MOOP.
It’s important to know your policy’s MOOP. Why? This information can help you make informed financial decisions in the case of severe illnesses or injuries.
5. Coinsurance
Coinsurance is a percentage you may have to pay after you have made it past your deductible. Some plans will offer a 20% coinsurance plan, where you will only pay for 20% of the medical bills that follow after your deductible is met.
Typically, only providers and services in your network offer this reduced percentage for payments. So, be careful to only visit those that your insurance covers.
Concluding words on health insurance plans defined
These are just a few of the several terms that you need to know when shopping for a health insurance plan, but having a firm understanding of what these terms mean can help you pick the best health insurance plan for you and your family.