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How Health Insurance Works | What is a Deductible? Coinsurance? Copay? Premium? - YouTube
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- If you have a health insurance plan,
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or you're in the market for insurance,
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you may be feeling a bit overwhelmed,
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and maybe confused by
all the terms being used,
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copay, deductibles,
premiums, co-insurance,
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individual out-of-pocket maximum.
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Add the fact that many
of these can vary widely
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based on the coverage or plan,
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and you've got a lot to
wrap your mind around.
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In this video, we're going to break down
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and demystify these essential
health insurance terms,
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explain how the costs work for both you
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and your insurance company,
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and hopefully make you
feel a bit more confident
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about how your plan works.
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So let's get started.
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Sort of the view from 10,000 feet is that
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there are three levels
of healthcare costs,
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and the higher your costs for the year,
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the higher up you go, level
one, level two, level three.
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On level one, you pay for everything.
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When your healthcare expenses
get to a certain point,
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you enter level two, where
you and your insurance company
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share the costs.
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And if the money you're
paying out of pocket
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hits your plans cap, then
you enter a level three,
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where your insurance will
cover everything further.
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We'll circle back to this at the end.
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It'll all make a little more sense.
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Now, whether your health
insurance is provided
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through your employer plan,
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through somebody else's employer plan,
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or a government-issued plan
like Medicare or Medicaid,
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they all have a set amount for premiums,
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deductibles, copay, and co-insurance.
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These are all terms that represent
your out-of-pocket costs.
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If you don't know what those
figures are for your policy,
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contact your insurance company to request
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a copy of your policy.
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Now, I just throw a bunch of terms at you.
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Let's define these suckers.
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Premium, think of your premium
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like a monthly subscription fee,
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like your Netflix subscription.
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This is how much you pay each month
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to keep your insurance active.
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And you pay this even if
you never go to the doctor.
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Just like with Netflix, even
if you don't watch anything,
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you're still paying your
subscription, right?
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Deductible, your deductible
is amount specified
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by your plan that you have to pay
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in a given year before
your insurance pays a dime.
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For example, if your
deductible is set at $4,000,
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and the bill for your visit
to the hospital was $2,000,
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you have to pay a 100%
of that bill, bummer.
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But if your deductible is set at $4,000
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and the hospital bill is $8,000,
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insurance would kick in to
help cover half of that bill.
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Notice that I said it will help.
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More on that later.
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The good news is that this
is an annual deductible,
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meaning that once you've paid that amount
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towards covered medical expenses,
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you don't have to pay it
again until your plan resets.
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Often, this is on January 1st,
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but that's not always the case.
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You should check with
your insurance provider.
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When shopping for health insurance,
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it's great to look for a
plan with a low deductible.
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However, there is of course a trade-off.
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Plans that feature a low deductible
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come with higher monthly premiums,
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while plans with lower monthly premiums
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have high deductibles.
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So why choose one over the other?
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Well, it comes down to what you anticipate
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your usage will be.
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If you usually go for one,
maybe two doctor's visits
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per year, you probably
want it high deductible
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with low premiums.
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These are often referred to as
catastrophic coverage plans,
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because they aren't going to kick in
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until something really significant,
or catastrophic happens.
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On the other hand, if you
visit the hospital a lot,
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or you have some upcoming procedures,
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then you probably wanna
go with a high premium,
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low deductible plan.
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If you have a health
insurance usage history,
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you can use that to help determine
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which kind of plan is
gonna be best for you.
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Copay, your copay is a
set cost that you pay
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for a covered healthcare service,
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such as visiting an in-network doctor,
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a specialist, or buying drugs.
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Let's say you go to see
your doctor who charges $250
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for an office visit.
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But your insurance has a copay
of $50 for doctor's visits.
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You pay $50, and your
insurance picks up the rest.
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Well, hold on a second.
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How do copays work if I
haven't met my deductible yet?
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Because copays are paying for
some of your medical expenses.
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Doesn't that not kick in
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until after you hit your deductible?
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Well, confusingly, it
depends on your policy.
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So that's something you
really wanna check on.
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Here's a tip, your
insurance will likely have
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a list of preventative care benefits
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that they'll cover at 100%,
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no copay, no deductible, no co-insurance.
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These often include vaccines
and many types of screenings,
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so take advantage of those.
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Co-insurance, remember
when I said that insurance
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would help cover costs that
exceed your deductible?
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That's where co-insurance comes in.
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Co-insurance is a shared cost between you
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and the insurance company.
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So depending on your policy,
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it may say that after your deductible,
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you pay 20% and your
insurance company pays 80%.
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That's called an 80/20 policy.
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Now, for the ease of
math, let's say you have
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a 50/50 policy with a $4,000 deductible,
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and you just had an $8,000 ER visit.
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You pay the first $4,000
to meet your deductible,
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and then the second $4,000
would be split 50/50,
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meaning you'd pay 2,000 of that.
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So for that $8,000 ER
visit, you'd be out $6,000.
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Individual out-of-pocket maximum,
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out of pocket is the amount
of money that you pay.
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This includes your copays,
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doctor's visits, co-insurance,
deductibles, drugs,
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and the out-of-pocket maximum is
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your plan's cap on how much you have
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to personally pay towards
your healthcare costs.
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After you hit that maximum,
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100% is covered by your insurance.
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Family out-of-pocket max,
based on what individual
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yearly out-of-pocket is, you
can probably guess this one.
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It's the cap on the medical
costs for a whole family.
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Now, let's bring back
the three levels example
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from the beginning.
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Now, you start in level one,
paying basically everything
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out of pocket, that is, until
you reach your deductible,
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and that's when you go to level two,
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and that's where you're splitting the cost
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with your insurance company
through co-insurance.
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If your medical expenses get so high
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that the total of what you paid reaches
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your yearly out-of-pocket maximum,
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you move to level three,
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where all further healthcare expenses
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for the rest of the year are 100% covered
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by your insurance plan.
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When your plan resets for the year,
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you start back at the beginning.
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Usually, this happens on January 1st,
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but some plans differ on their reset date.
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If you're still feeling unsure
about what this all means,
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or about your financial responsibility
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for your covered services,
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your local healthcare
facility can often help you
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obtain and understand this information,
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especially when considering
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an upcoming service or appointment.
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Hopefully, this video has helped you feel
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a little more comfortable
with the costs involved
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in your health insurance.
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Thanks for watching.
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