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How to Choose Health Insurance


Choosing the right health insurance comes down to two basic questions: what coverage do you need, and how much do you want to pay for it? Before making any decisions, you should understand the basic elements of every health insurance plan.

 

Premium

Your premium is your monthly payment. This is what many people notice first, because it has the most immediate financial impact.

If your premium is $100, you will pay $100 every month for health insurance.

What do you want to spend per month?

Deductible

Your deductible is the amount that you are responsible for before your health insurance kicks in. Once you reach your deductible, you pay a percentage of the remaining costs for covered expenses.

Say you have a $1,000 deductible and you're involved in an accident that requires hospitalization. Your health insurance will pay for the remaining covered expenses of your hospital bill after you reach your $1,000 deductible and any coinsurance amounts that you may owe.

In an emergency, what could you afford?

Coinsurance

Your coinsurance is your share of the costs of a covered health care service.

If your coinsurance is 80/20 and you have a deductible of $1,000, your health insurance will cover 80% of your covered medical expenses once you meet your deductible. You will be responsible for the remaining 20%.

Out-of-Pocket Maximum

Your out-of-pocket maximum is the max amount that you could possibly pay for healthcare in a year. Your health insurance will pay for covered medical costs that extend beyond your out-of-pocket maximum. Your out-of-pocket maximum does not include your monthly premium or any services that are not covered by your health insurance plan.

Say your out-of-pocket maximum is $5,000 and you are involved in an accident with medical fees reaching $100,000. Once you reach your deductible and after your coinsurance kicks in, your health insurance will cover the cost that extends beyond your out-of-pocket maximum up to the coverage period maximum.

Copay

Your copay is a predetermined amount that you pay out-of-pocket for common medical services, like doctor visits and prescription medications. After paying your copay, your health insurance will cover any remaining costs for that service or prescription.

Other common copay events include checkups with your primary care physician, which might be $50 per visit, and costs for generic medications, which could be $20. All copay fees apply toward your deductible.

Emergency Room Additional Deductible

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Urgent Care Facility

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Ambulance Maximum per Trip

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*Examples are for illustration purposes only. Deductibles, coinsurances and out-of-pocket maximums vary by plan.