Explanation of Insurance Terms

What is a deductible?

A deductible is the amount you pay for health care services before your health insurance begins to pay.

How it works: If your plan’s deductible is $1500, you’ll pay 100 percent of eligible health care expenses until the bills total $1500. After that, you share the cost with your plan by paying coinsurance.

What is coinsurance?

Coinsurance is your share of the costs of a health care service. It’s usually figured as a percentage of the amount we allow to be charged for services. You start paying coinsurance after you’ve paid your plan’s deductible.

How it works: You’ve paid $1,500 in health care expenses and met your deductible. When you go to the doctor, instead of paying all costs, you and your plan share the cost. For example, your plan pays 70 percent. The 30 percent you pay is your coinsurance.

What is a copay?

A copay is a fixed amount you pay for a health care service, usually when you receive the service. The amount can vary by the type of service.

How it works: Your plan determines what your copay is for the different types of services, and when you have one. You may have a copay before you’ve finished paying toward your deductible. You may also have a copay after you pay your deductible, and when you owe coinsurance.

What is an out of pocket maxiumum?

An out-of-pocket maximum is when you share the cost of your care with your health insurance company when you pay your deductible, coinsurance, and copays. But there’s a limit to how much you pay – this is called the out-of-pocket maximum. This is the most you will have to pay during a policy period, usually a year, for health care services.

How it works: What you pay toward your plan’s deductible, coinsurance, and copays are all applied to your out-of-pocket max. Once you reach your out-of-pocket max, your plan pays 100 percent of the allowed amount for covered services.

If your plan covers more than one person, you may have a family out-of-pocket max and individual out of pocket maximums. That means:

  • When the deductibe, coinsurance, and copays for one person reach the individual maximum, your plan then pays 100 percent of the allowed amount for that person
  • When what you’ve paid towards your individual maximum adds up to your family out-of-pocket max, your plan will pay 100 percent of the allowed amount for that person.

Having health insurance does not mean you will never receive a bill from a medical facility. There could be many possible reasons that you received a bill from a medical facility.

  • You have not paid your copayment. Your copayment is a fixed amount you pay for a covered health service. Usually you pay your copayment at the time of service, but if you forget to pay at time of visit, or there is an emergency, you may be billed for your copayment after your visit.
  • You have not met your deductible: Your deductible is the amount you agree to pay for covered health care services before your health insurance plan begins to pay. For example, if your deductible is $1000, your plan won’t pay anything until you’ve paid $1000 for covered services. Some plans do allow for basic preventative screenings and yearly exams before the ductible is met, but all other healthcare services would require a payment toward the deductible. Even if you are only coming in for a few acupuncture treatments you can use your insurance but make the payments for treatments and apply them towards this deductible. In that case we collect based on what your insurance pays, not on the cash rate. If we don’t know what the insurance pays yet, we will bill you after your visit.
  • Your bill is for coinsurance: If your health plan includes coinsurance, you agree to pay a share of the costs of a covered health care service, calculated as a percentage (for example, 20 percent) of the allowed amount for the service. You pay coinsurance after you’ve met your deductible. For example, if your health plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your 20 percent coinsurance payment would be $20.
  • The insurance company denied payment: While you pay with insurance, you are ultimately responsible for the cost of the services you use. If the insurance company denies payment, you will have to cover the cost of the service.
  • The medical facility made a mistake: Billing mistakes happen. If this occurs, our biller can work with insurance and resubmit a corrected claim.

What is a Health Savings Account (HSA)?

An HSA is a tax-advantaged account owned by an individual with a high deductible health insurance plan. Both the person on the account and their employer can contribute a certain amount of money to the account each year. (Note: FSA’s are a similar arrangement to HSAs, but the tax advantaged account is connected to the employer rather than the employee.)

What is a Health Reimbursement Arrangement (HRA)?

This is an employer-funded plan where employees can be reimbursed by their employer for qualified medical expenses and insurance premiums. These are not bank accounts, they are an agreement between employee and employer.