[Music playing] It could seem like insurance companies
often use terms you’ve never heard before. Three of the most common ones are deductible, coinsurance and co-pay. A deductible is the amount you need to pay toward your covered medical expenses in a policy year before your health insurance kicks
in. Coinsurance is a percentage of your covered medical expenses you pay after
you’ve met your deductible. A copay is a fixed amount you pay at the time of
service. The easiest way to explain these is with an example. Let’s say Joe’s
health insurance has a $250 annual deductible, 20% coinsurance for seeing a
preferred provider and co-pays for doctor’s office visits and prescriptions.
One day Joe has an accident on his bicycle and he ends up with a swollen
knee and a cut that needs stitches. Since this isn’t an emergency, Joe goes to an
urgent care clinic, that’s a preferred provider in his health insurance network.
Joe’s x-rays don’t show anything broken. So he just gets stitches and a
prescription for a painkiller. This is the first time he’s used his insurance
policy this year. So Joe hasn’t met his deductible yet. That means he’s responsible for the first $250 of his Urgent Care
Clinic bill, which meets the deductible then just 20% of the remaining
network charges. Joe’s insurance company will pick up the remaining 80% of the
network charges. At the network pharmacy he has a $30 copay for his prescription.
So that’s all he pays for the medication. About 10 days later, Joe goes to his
regular doctor to have the stitches removed and pays a $30 copay for that
visit. His knee is still bothering him. So the doctor orders an MRI at a preferred
provider. Since Joe meets his deductible, he’ll only need to pay his 20%
coinsurance for the MRI and the insurance company will pay the other 80%
of the network charges. So there you have it. A deductible is the dollar amount
you’ll need to pay toward your covered medical expenses in a policy year before
your health insurance starts paying. Coinsurance is a percentage of
your covered medical expenses you’re responsible for after you’ve met your
deductible. You’re sharing the cost of your covered medical expenses with your
insurer. A copay is a fixed dollar amount you’ll pay at the time of service for
certain covered medical expenses like prescriptions and doctor visits. [Music playing]