Premiums, co-pays and deductibles: understanding your health insurance

Health insurance words can be difficult especially if there are insurance terms you don’t understand.

Having a basic understanding of health insurance definitions can make a difference in which plan you choose and how you get the most out of your plan. Here is an overview of some basic terms that can help you navigate your current plan or shop for a new health plan.

One of the first words you might see with insurance is premium. Let’s explore that term along with some of the other words that make up out-of-pocket costs.

Premium

The amount you pay for your health insurance every month to keep your health care active. You pay your premium every month, and how much you pay can change how much you pay for doctor’s visits.

With most plans purchased through the state’s health insurance Marketplace (Washington Healthplanfinder) your monthly premium costs depend on the plan’s metal level: Gold, Silver and Bronze. You could be eligible for subsidies and cost-savings that will bring your actual coverage costs down.

Bronze

This plan has the lowest monthly cost, but you pay more at time of care. This is a good choice for people who do not think they will need to use their coverage but want protection against the high costs of serious health events like an injury or accident.

Silver

This plan has a moderate cost at the time of care and a moderate monthly payment. This is a good choice if you get care a few times per year.

Gold

This plan provides the highest coverage and comes with the highest monthly premium. You might consider gold if you receive care frequently throughout the year or want lower costs at time of care.

An example of how this works:

Khala is 45 and has two kids. She works as a real estate agent and doesn’t get insurance through work. Khala has diabetes and visits her doctor several times per year. One of her children has asthma and they must go to a specialist every year. With a higher premium like Silver or Gold she can budget how much her health insurance costs instead of being surprised and paying more at the time of service.

Out-of-Pocket Costs

Your expenses for medical care that aren’t reimbursed by insurance. Out-of-pocket costs could include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren’t covered.

Deductible: The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. There are no deductibles with Apple Health (Medicaid).
Copayment: A fixed amount ($30, for example) you pay for a health care service, usually when you receive the service. There are no copays with Apple Health (Medicaid).
Coinsurance: The percentage of costs of a covered health care service you pay (20%, for example) after you’ve paid your deductible.

An example of how this works

Daveed is 21 and has health insurance. His health care plan has a $2,000 deductible and a $30 copay. Daveed goes to his Primary Care Provider for his asthma and pays the $30 co-pay.

The next day. Daveed breaks his leg playing soccer with some friends. The total cost of his treatment including surgery is $17,000. Without insurance Daveed would have to pay the whole amount.

Because he has health insurance, he first pays his deductible of $2,000. Then his health insurance pays 80% of the remaining cost leaving Daveed responsible for 20%.

The total bill is:	$17,000
Daveed pays his deductible of	$2,000
Sum of total remaining:
Insurance pays (80%)	$12,000
Daveed’s coinsurance (20%)	$3,000
In total, Daveed pays	$5,000

If you don’t qualify for Apple Health (Medicaid), you can still get other types of plans and savings. CHPW Individual & Family Plans offer coverage for as low as $10 a month, maybe even $0 a month depending on your income.