Easy Guide to Understanding the Terminology of Health Insurance Plans

When shopping for Texas health insurance plans, it is important that you understand the terminology that is used to describe your benefits. This will allow you to effectively compare them and pick the medical plan that fits your needs. Although it can feel like you are reading a completely different language when you look at your insurance benefits booklet, once you know what those terms mean your coverage will be easier to understand. Here are some common terms that you will run across and their basic definitions.

Insurance Deductible -  This is the amount of money you are required to pay out of pocket before the insurance company will begin to pay the medical bills. This is similar to the deductible you have to pay before your car insurance provider will pay out the benefits of your auto policy. The average deductible for Texas health insurance plans amount is $500. Therefore, you would have to pay for $500 worth of medical bills before your insurance kicked in. The higher the deductible amount the lower your premiums and vice versa. There are insurance plans that you can sign up for which feature high deductibles and low premiums that can be paired with a health savings account to manage medical expenses

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Coinsurance - This is not the same as co-payment. A co-payment is a fixed amount that you have to pay for specific medical services like routine checkups. Coinsurance is the percentage you have to pay out of pocket for your medical care. The most common split seen on Texas health insurance plans is an 80/20 split where the insurance company pays 80% of the medical bill and you pay the other 20%. You will usually see this on services that are more costly such as hospital care.

Out of Pocket Expenses - Most Texas health insurance plans will have a yearly cap on the amount of money you have to pay out of pocket for your medical care. This includes your deductible, co payments, and coinsurance. Once you have hit this maximum amount then your insurance company will begin paying your medical bills at 100%. The main benefit of this is that if you ever contract a catastrophic disease or have a medical emergency, you will only have to pay the maximum in out of pocket expenses and your insurance will cover the rest. For example, if your maximum out of pocket expenses is $5,000 and it costs $20,000 to treat you, you will only be responsible for $5,000 of the bill. 

All of these amounts can vary greatly so we advise consulting with a qualified broker or agent in order to have a better understanding of exactly how the differences affect your situation.

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