Does talking about your health coverage feel like a foreign language?
If your answer is yes, you’re not alone. In a 2017 survey of almost 1,000 Washington residents, we learned that there is a lot of confusion around health insurance terms and costs.
Just over two thirds of respondents were able to correctly define a premium, and over half understood deductibles. Fewer than half knew the correct definitions of copay, coinsurance, and out-of-pocket maximum.
Fortunately, it only takes a couple minutes to get ahead of the curve. With these terms under your belt, you’ll be well-equipped to understand your health care costs.
Premium
The amount you pay for your health coverage, usually each month. This doesn’t count toward your deductible or out-of-pocket maximum.
Deductible
An amount you pay for covered services each year before your plan starts paying. (Not all plans have deductibles.)
For example: Your plan has a $500 deductible. You pay the full charges for covered services up to $500. After you reach this amount, you just pay a copay or coinsurance for each visit.
Copay
A set amount you pay for covered services.
For example: A doctor visit costs $120. You pay a $20 copay when you visit the doctor. Kaiser Permanente covers the rest ($100).
Coinsurance
A percentage of the charges that you pay for covered services.
For example: If a procedure is $200 and your coinsurance is 20%, you pay just $40. Kaiser Permanente covers the rest ($160).
Out-of-pocket maximum
This is the most you’ll pay for covered services each year. If you reach your maximum, you won’t pay out-of-pocket costs for covered services for the rest of the year.
Remember, out-of-pocket costs and out of pocket maximums vary by plan. Sign on at kp.org/wa to see your summary of benefits (under Coverage & Costs -> Coverage Documents).
