Health Insurance

These are some factors (not all) that Heritage Insurance Agents will assess in determining which of our companies fits your risk management needs. We will then shop the price to ensure the best fit within those companies.

There are several health insurance terms to understand:

• Premium: The monthly fee for your insurance.
• Deductible: How much you must kick in for care first, before your insurer pays.
• Co-pay: Your cost for routine services to which your deductible does not apply.
• Co-insurance: The percentage you must pay for care after you’ve met your deductible.
• Out-of-pocket maximum: The absolute max you’ll pay annually.

Premium

Your premium is the amount you pay into the insurance plan on a regular basis.

If you belong to an employer-sponsored plan, the premium is likely deducted from each paycheck as pre-tax dollars. If you purchase your own health insurance plan, you may have the option to pay your premium annually, quarterly, or monthly. Health insurance premiums vary greatly depending on what medical expenses the plan covers, which doctors you can see, and how much you will have to pay in other ways when you use services.

Deductible

Your health insurance deductible is the amount that you will have to pay annually for your healthcare (such as surgical procedures, blood tests, or hospitalizations — but not some routine care) before the health insurance pays anything.

For example, if you have a $2,500 deductible and undergo three $1,000 procedures in a year, you will have to pay the full bill for the first two procedures and $500 of the third … your insurance will cover half of the third procedure.

Increasing your deductible is the easiest way to lower your premiums and, if you’re mostly healthy, might be a good idea. Just understand, however, that if you have a $10,000 deductible and get sick, you could end up with $10,000 in medical bills in a year. Typically, your deductible does not apply for preventative health checkups and many routine health services … you’ll just pay a co-pay instead.

Co-pay

Your co-pay is the fixed amount you pay for using routine services defined by your plan. For example, some plans charge you a co-pay for visiting your primary care physician, or an emergency room, or purchasing a prescription drug.

In most cases, the payment is the same regardless of the extent of the visit or the cost of the drug. For example, a plan may require co-pays of $20 for office visits, $100 for emergency room visits, $15 for generic prescriptions, or $30 for name-brand drugs.

If your plan charges a co-pay for certain services, this means you’ll pay much less for these services right away (and long before you hit your deductible).

Co-insurance

Co-insurance is similar to a co-pay, although co-insurance generally applies to less routine expenses, and is expressed as a percentage rather than a fixed dollar amount.

Co-insurance kicks in after you hit your deductible.

If your plan has a $100 deductible and 30% co-insurance and you use $1,000 in services, you’ll pay the $100 plus 30% of the remaining $900, up to your out-of-pocket maximum. You may find plans with no co-insurance requirements, some with 20/80 or 50/50 coinsurance, or other combinations.

Out-of-pocket maximum

Your out-of-pocket maximum is an important feature of your health plan because it limits the total amount you pay each calendar year for healthcare including co-pays, deductibles, and co-insurance.

If your policy carries a $2,500 out-of-pocket maximum and you get sick and require a lot of healthcare services, the most you will pay in a year is $2,500. After that, insurance picks up the rest of the tab.