Healthcare 101: Deductibles, Co-payments & Co-insurance Explained

Health insurance is designed to help you and your family cover the cost of your medical care including doctor visits and prescription medicines. Similar to car insurance, your responsible for paying a specific amount or premium each month whether or not you use any medical services. In return, your insurer will pay a portion of your medical cost should you or a family member get sick or injured. Keep in mind that your plan will likely require you to pay a portion of the expenses using your own money.

These out of pocket costs may include deductibles, co-payments and co insurance. Deductible is the amount you have to pay out of pocket before your plan will pay any expenses, meaning the deductible must be met before getting coverage for some or all prescriptions. So for example, if your deductible is $1,000, your plan won’t pay any other health care costs until you’ve paid $1,000 in expenses out of pocket. Once you make your deductible, you may still have to pay a certain amount out of pocket for services.

Another┬átype of out of pocket cost is a co-payment. This is a flat fee that you must pay for specific health related services such as a visit to the ER for an injury, seeing the doctor when you’re sick, or picking up a prescription for the pharmacy. For some services, your insurance might require a different kind of out of pocket expense called co -insurance .

Co-insurance means you must pay a percentage of total cost rather than a dollar amount, so for example a medicine might require a 30% coinsurance. On a $1,000 prescription, you have to pay $300 because co-insurance is a percentage. This can vary greatly based on the cost of a service or product – they can be difficult to predict and all health insurance plans are different. Be sure you’re aware of what you may have to pay to see your doctor or access the medicines you need.