Breaking Down Health Insurance Terms
Understanding health insurance doesn't have to be confusing. Here's a guide to common terms you'll encounter when reviewing your benefits.
Premium
The amount you pay monthly for your health insurance coverage, regardless of whether you use medical services.
Deductible
The amount you must pay out-of-pocket before your insurance begins covering costs. Higher deductibles typically mean lower premiums.
Copay (Copayment)
A fixed amount you pay for covered services at the time of the visit, such as $25 for a doctor's appointment.
Coinsurance
Your share of costs after meeting your deductible, expressed as a percentage (e.g., you pay 20%, insurance pays 80%).
Out-of-Pocket Maximum
The most you'll pay during a policy year. After reaching this limit, insurance covers 100% of covered services.
In-Network vs. Out-of-Network
In-network providers have agreements with your insurer for lower rates. Out-of-network care typically costs more.
HMO (Health Maintenance Organization)
A plan requiring you to choose a primary care physician and get referrals to see specialists.
PPO (Preferred Provider Organization)
A plan offering more flexibility to see specialists without referrals and use out-of-network providers.
HSA (Health Savings Account)
A tax-advantaged savings account for medical expenses, available with high-deductible health plans.
FSA (Flexible Spending Account)
An employer-sponsored benefit allowing you to set aside pre-tax money for eligible medical expenses.
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