Welcome to our Basic Definitions series, where we put financial and health terms into actual, understandable English!
Part 1: Let’s talk health insurance.
If you know your health insurance policy like you know your Beyonce “Lemonade” lyrics, you probably don’t need this blog. But for those of you who, like us, have ever found yourselves swirling around in a chaotic whirlpool of healthcare jargon, we thought we’d do a little bit of clarification.
If you have health insurance, you pay for your healthcare in 3 different ways. Those are:
Let’s break it down here.
Think of premiums as the actual price you pay for your healthcare. You’re just buying a service, like you would buy cable or electricity. The difference is that in this case, the service you’re paying for is for someone else paying something! Totally meta, huh?
Premiums have nothing to do with going to the doctor’s office. They’re just a fee you pay every month, whether you go get that flu shot or not.
Now comes the part about actually heading to the doctor. Your deductible is an amount of money set by your insurance company that you have to pony up before they’ll start paying their part for your care. It’s usually somewhere in the thousands of dollars…well, sort of. Like a lot of things about healthcare, it’s complicated.
Say you’ve met your deductible already for doc visits (you got a lot of colds last winter!). But one day, you stretch a little too far on the stepladder in the kitchen, fall and sprain a shoulder. You’ll probably still have to pay a few hundred dollars, often as much as $500, for that ER trip. (Nota bene: that’s a good reason to head to urgent cares instead of ERs for minor injuries. Deductibles there are often lower.)
Okay. So you’ve paid your monthly premium, met your deductible, and now it’s time for your third bill: coinsurance.
This is the part where you start splitting your medical care with your insurance provider. Ideally, they’re paying a much larger part than you are. (That’d be nice, anyway.) The part you pay is called either coinsurance.
Coinsurance shows up as a percentage of a bill. Example: Need an MRI to take a look at that bum shoulder? Your coinsurance might be 20% of your bill.
Once More, with Feeling
- First, you pay your premium, so that you can have health insurance at all.
- Second, you pay your deductible, so that the company will start paying their part.
- Third, you split the bill, and your part is coinsurance.
Easy peasy! (Oh, wait — no it’s not. We’re talking about health insurance here.)
But you know what really is easy? Taking action to stop rising NC healthcare prices. (That’s the premiums part.) Join us, and learn how!