Understanding Health Insurance Terms

What is a Deductible?
A deductible is the amount of money you must pay each year for certain services before your health plan begins paying benefits.

For example, if Mary's deductible amount is $2,000, that's the amount she has to pay before her health plan will start paying its percentage. So, when she needed outpatient surgery at the beginning of the year, and her total bill was $5,000, she paid the first $2,000. The health plan paid its portion of the remaining $3,000.

What is Coinsurance?
Coinsurance refers to the percentage of health care costs you are responsible for paying, typically after your deductible is met.

In Mary's case, her co-insurance for hospital charges is 20 percent. Her health plan pays 80 percent for covered services, and she pays the remaining 20 percent. Once she paid the deductible charge for her surgery, she must pay 20 percent, or $600 of the remaining $3,000. The health plan will pay the other 80 percent, or $2,400.