Choosing a health insurance company—and an insurance plan—can be confusing. But, when you know a few key facts, the decisions are a lot easier. Copays, deductibles and coinsurance all work together to reduce your medical expenses and protect your finances. They also help reduce everyday health-related expenses, like a visit to the doctor for a sprained ankle or an illness.
Most people are familiar with copays. You walk into a doctor’s office—they expect a copay. This is your initial payment for service, no matter what your visit is for.
In addition to your copay, you are responsible for 100% of your medical expenses, until you reach your deductible. It’s like car insurance—should you need to, you pay your deductible and then insurance kicks in to help pay.
Some people get confused about copay vs. coinsurance. Just remember, they are not the same thing. When you reach your deductible, you must pay a percentage of the remaining costs—this is the coinsurance amount.
That’s how health insurance works. You pay a monthly premium—just as you do with car insurance. You pay a deductible when you have medical expense. But with health insurance, you also pay a percent of the remaining expenses—to a limit known as the maximum out of pocket or MOOP.
Many health insurance plans provide coverage for prescription drugs. Review your prescription needs to make sure they are covered by your plan.
For some people, a policy with tax benefits is attractive. Health insurance plans that feature a Health Savings Account allow you to set aside tax-deferred money toward future qualified medical expenses. That money can go into a bank account or investment account—it’s your choice. If you don’t use the money, you can roll it toward next year’s expenses. Or, you can keep saving toward retirement. It’s a tax shelter that many people prefer—and that works especially well if you’re healthy.
Take time to think about the past year. How often did you or your family visit doctors? Did anyone go to the emergency room, or to an urgent care clinic? Did you meet your deductible? Is your doctor in-network? There are no “right” or “wrong” answers. These questions will help you decide which insurance plan is best for you. Review your current plan—and see which blend of copays, deductibles and coinsurance will meet your individual needs.