Health insurance has some terms that can be confusing if you’re not used to them. Three of the most common ones are deductible, copay, and coinsurance. These are the key things that decide how much money you’ll pay when you use your insurance, so it’s important to understand how they work.
A deductible is the amount of money you have to pay first before your insurance starts helping with the bills. For example, if your deductible is $1,000, you must pay the first $1,000 of your medical costs yourself. After that, your insurance begins to cover part of the costs. Some services like checkups or basic care may still be covered even before you meet your deductible.
A copay is a small fixed amount you pay each time you use a service. It could be $20 for a doctor visit or $10 for a prescription. Copays are simple and easy to understand—you just pay that flat fee every time you go, no matter what the total cost is. Not all plans have copays, but many do, especially for simple visits or medicine.
Coinsurance is a percentage of the cost that you pay after you’ve met your deductible. For example, if your coinsurance is 20%, and the bill is $1,000, you would pay $200 and your insurance would pay the rest. Unlike a copay, coinsurance depends on how much the service costs, so your payment can change.
Here’s how it all works together. First, you pay your deductible. Once that’s done, you might still have to pay coinsurance or a copay, depending on what your plan says. When you reach your plan’s out-of-pocket limit—the maximum amount you’ll have to pay in a year—your insurance covers 100% of covered services after that.
Understanding these terms helps you plan better. You’ll know what to expect at the doctor’s office and avoid surprises on your bill. When comparing health plans, always check the deductible, copays, and coinsurance so you can choose one that fits your budget and health needs.
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