College graduation season is coming up fast, which for many people could mean choosing a health plan for the first time. Here are four important terms to know.
PREMIUM: This is the amount you pay to the insurance company each month to ensure coverage.
DEDUCTIBLE: This is the amount you must pay out of pocket for certain services before insurance pays for anything. The amount resets at the beginning of your plan year, which may or may not coincide with the calendar year. Generally, a lower premium means a higher deductible, and vice versa.
COPAY: This is a fixed amount the patient must pay for a service, such as a doctor visit. The amount could vary depending on what type of service you’re getting. For example, you could pay a $20 copay for a primary care visit and $50 for a specialist visit. However, the amount for any one service will not fluctuate as long as your health plan remains the same.
COINSURANCE: This is a percentage of the cost you will pay for a service after you have met your deductible. For example, if you need an MRI, your insurance will cover a certain percentage, leaving the remainder for you to pay for out of pocket.
OUT-OF-POCKET MAXIMUM: Excluding premiums, this is the maximum amount you’ll need to pay for your healthcare in a plan year. Once you have reached your out-of-pocket maximum, your insurance will pay 100% of the costs for your care for the remainder of the year.
