Understanding Your Health Insurance

Your health insurance policy is a contract between you and the insurance company. It is an agreement that your insurance will pay for covered medical services as long as your premiums have been paid. They may not pay for every bill or treatment. It is very important that you know which medical treatments they will pay for and what they will not cover. Please keep in mind that determination of benefits is NOT a guarantee of payment.


The deductible refers to the amount of money that you would need to pay before any benefits from the health insurance policy can be used. This is usually a yearly amount so when the policy is renewed, usually after a year, the deductible would be in effect again. Some services may be available without meeting the deductible first. Usually there are separate individual deductible amounts and total family deductible amounts.


The insurance company has a set fee limit for each type of treatment. The insurance company will pay the maximum according to your plan policy and anything beyond that is your responsibility. This is usually a percentage amount that is your responsibility. A common co-insurance split is 80/20. This means that the insurance company will pay 80% of the procedure and you are required to pay the other 20%.


The co-payment is a fixed amount that you are required to pay at the time of service. It is usually required for basic doctor visits and when purchasing prescription medications.


This is the cost one would pay out of their own pocket. An out of pocket expense may refer to the co-payment, coinsurance, or deductible is. Also, when the term annual out-of -pocket maximum is used, that is referring to how much the insured would have to pay for the whole year out of their pocket, excluding premiums.