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Understanding Basic Health Insurance Terminology

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Many individuals are intimidated when looking for health insurance or talking to health insurance agents because they don't understand what some of the frequently used terms used in the industry. Your California health insurance agent wants you to feel comfortable speaking about health insurance needs, benefits, and costs. In order to do this, it’s essential that you know the basics regarding three very familiar and common terms when discussing any type of health insurance policy. These terms are often most confusing to consumers and include deductibles, co-pays, and out-of-pocket max expenses or payments.

According to the Health Insurance Resource Center, deductibles, co-payments and out-of-pocket payments are defined in the following manner:

Deductible: This is a fixed dollar amount an individual must pay out of their own pocket for health care expenses before the California health insurance policy will start covering costs. In general a deductible must be met once per calendar year.

Co-Payment: A preset (flat) payment that you will pay for health care services when visiting a doctor’s office or receiving a specific health care service (ie. Ambulance ride, Emergency room visit, etc.) described in your policies benefits that is in addition to what the California health insurance plan covers. Some HMO’s call for a $20 "co-payment" for each doctors office visit, no matter what kind or level of services provided in the doctor’s office visit. PPO doctors office visit co-pay usually only covers the consultation (the talking part). Co-payments are sometimes specified by a percentage of whatever the negotiated rate is for that particular service.

Out-Of-Pocket Maximum: A predetermined dollar amount the insured person receiving care will pay out of their own pocket before the California health insurance company will start paying 100 percent of the individual's health care expenses until the end of the calendar year.

For example, your deductible is going to be based on the type of plan you have. Many different plans offer different deductibles that state maximum amounts to be paid for by individuals or family per calendar year. For example, an Anthem Blue Cross deductible may range from $500-$5,000 or more per year per individual. It's much like the deductible on your auto insurance policy.  If you have $1,000 worth of damages, and your deductible is $250, you are responsible for the first $250 of repairs, and then your insurance company will pick up the tab for the rest. Your health insurance works much the same way.

Copayments are often made at the time of an office visit regardless of your insurance company policy regarding payments or reimbursement. Many medical offices charge a $5 or $10 copayment before services are rendered, so always ask your California health insurance agent about the copayment amount of a particular policy.

Average out-of-pocket expense maximums will also depend on the type of policy you have chosen, but averages usually cap out at $1,000-$5,000 or more per individual, which also includes any coinsurance payments as well as deductibles that have been met. However, be aware that your out-of-pocket expenses maximum will depend on the type of insurance policy you have chosen, as well as your deductible type.

If you have concerns or questions about any type of health plan or policy, discuss them with your California health insurance agent. Don't be embarrassed because you don't fully understand the terminology in the field of health insurance coverage. Ask questions. Know what you're getting, what's covered, and what's not before you make a decision on a health insurance policy or plan for you or your family.

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Matts California health insurance services can help you easily find a health plan that fits your health care needs as well as your budget. As an independent broker we can give you an unbiased comparison from all the top California health insurance companies in one easy quote. Compare carriers like Anthem Blue Cross, Aetna, Health Net, Blue Shield of California, PacifiCare, and Celtic health plans. Once you have finished your research and have decided on a plan you can use our secure carrier direct online health insurance application links to apply for coverage. If you prefer to print out an application we have the most up to date applications available from every carrier. And of course we are available to answer any questions you may have.