Five health insurance terms you should know

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A quick introduction to health insurance

Navigating the world of health insurance can be a confusing task for many people, so knowing key terms is crucial to making informed decisions about your healthcare coverage. Read along as we break down five terms that will make your insurance plan much easier to understand.

Premium:

The premium is the amount of money you pay to your insurance company for coverage. This is typically a monthly fee that ensures your policy remains active, allowing you to access various healthcare services. Premiums vary based on factors such as age, location and the type of coverage you choose.

Example: If your monthly premium is $300, you will pay this amount to your insurance provider every month to maintain your health insurance coverage.

Benefits:

Benefits refer to the services and treatments covered by your health insurance plan. These can include hospital stays, doctor visits, prescription medications, preventive care and more. Understanding your policy's benefits is crucial for knowing what healthcare services are covered and to what extent.

Example: If your health insurance plan covers preventive care, you may be eligible for free vaccinations and screenings as part of your benefits.

Deductible:

The deductible is the amount you must pay out of pocket before your insurance coverage kicks in. This is an annual cost, and once you reach your deductible, the insurance company starts covering a portion or the full cost of your healthcare expenses. Higher deductibles often result in lower monthly premiums but require you to pay more upfront when seeking medical care.

Example: If your health insurance plan has a $1,000 deductible, you must personally cover the first $1,000 of eligible medical expenses before your insurance starts contributing.

Copayment:

A copayment, or copay, is a fixed amount you pay for a covered healthcare service, usually due at the time of the service. This is in addition to any deductible you may have. Copayments are designed to share the cost of services between the insured individual and the insurance provider. You may have multiple copayments set depending on the type of service or appointment you need. 

Example: If your copayment for a doctor's visit is $20, you will pay this amount directly to the healthcare provider during the appointment, and your insurance will cover the remaining eligible costs.

Network:

A network consists of healthcare providers, hospitals and facilities that have contracted with an insurance company to provide services at pre-negotiated rates. Staying within your insurance network ensures that you receive maximum coverage, while seeking care outside the network may result in higher out-of-pocket costs.

Health insurance doesn't have to be overwhelming

Becoming familiar with these five terms will empower you to make informed decisions about your healthcare coverage. Take the time to review your policy, understand the terms and ensure that your insurance meets your specific needs and financial considerations. This will not only save you money but also contribute to a healthier and more secure future.