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00:00If you have a health insurance plan or you're in the market for insurance you may be feeling a bit overwhelmed and maybe confused
00:06by all the terms being used.
00:07Copay, deductibles, premiums, coinsurance,
00:10individual out-of-pocket maximum. Add the fact that many of these can vary widely based on the coverage or plan
00:17and you've got a lot to wrap your mind around. In this video
00:20we're going to break down and demystify these essential health insurance terms,
00:23explain how the costs work for both you and your insurance company, and
00:27hopefully make you feel a bit more confident about how your plan works.
00:30So let's get started.
00:31Sort of the view from 10,000 feet is that there are three levels of health care costs and the higher your cost for the year,
00:37the higher up you go. Level 1, level 2, level 3. On level 1
00:41you pay for everything.
00:42When your health care expenses get to a certain point you enter level 2 where you and your insurance company share the costs and
00:50if the money you're paying out-of-pocket hits your plans cap
00:54then you enter level 3 where your insurance will cover everything further. We'll circle back to this at the end
01:00it'll all make a little more sense.
01:01Now whether your health insurance is provided through your employer plan,
01:05through somebody else's employer plan, or government-issued plan like Medicare or Medicaid,
01:10they all have a set amount for premiums, deductibles, copay, and coinsurance.
01:15These are all terms that represent your out-of-pocket costs.
01:19If you don't know what those figures are for your policy, contact your insurance company to request a copy of your policy.
01:24Now I just threw a bunch of terms at you. Let's define these suckers.
01:28Premium. Think of your premium like a monthly subscription fee, like your Netflix subscription.
01:33This is how much you pay each month to keep your insurance active and you pay this
01:37even if you never go to the doctor. Just like with Netflix, even if you don't watch anything, you're still paying your subscription, right?
01:44Deductible. Your deductible is amount specified by your plan that you have to pay in a given year before your insurance pays a dime.
01:51For example, if your deductible is set at $4,000 and the bill for your visit to the hospital was $2,000,
01:57you have to pay a hundred percent of that bill.
02:00Bummer. But if your deductible is set at $4,000 and the hospital bill is $8,000,
02:05insurance would kick in to help cover half of that bill. Notice that I said it will help.
02:10More on that later. The good news is that this is an annual deductible, meaning that once you've paid that amount towards covered medical expenses,
02:17you don't have to pay it again until your plan resets. Often this is on January 1st,
02:23but that's not always the case. You should check with your insurance provider. When shopping for health insurance,
02:27it's great to look for a plan with a low deductible.
02:29However, there is of course a trade-off. Plans that feature a low deductible come with higher monthly premiums,
02:35while plans with lower monthly premiums have high deductibles. So why choose one over the other?
02:41Well, it comes down to what you anticipate your usage will be. If you usually go for one,
02:45maybe two doctor's visits per year, you probably want a high deductible with low premiums.
02:50These are often referred to as catastrophic coverage plans because they aren't going to kick in until something really significant or
02:57catastrophic happens. On the other hand, if you visit the hospital a lot or you have some upcoming procedures,
03:02then you probably want to go with a high premium, low deductible plan. If you have a health insurance usage history,
03:09you can use that to help determine which kind of plan is going to be best for you.
03:13Co-pay. Your co-pay is a set cost that you pay for a covered health care service,
03:17such as visiting an in-network doctor, a specialist, or buying drugs.
03:21Let's say you go to see your doctor who charges $250 for an office visit,
03:25but your insurance has a co-pay of $50 for doctor's visits. You pay $50 and your insurance picks up the rest.
03:32Well, hold on a second.
03:33How do co-pays work if I haven't met my deductible yet? Because co-pays are
03:39paying for some of your medical expenses.
03:41Doesn't that not kick in until after you hit your deductible? Well, confusingly, it depends on your policy.
03:47So that's something you really want to check on.
03:49Here's a tip. Your insurance will likely have a list of preventative care benefits that they'll cover at a hundred percent. No co-pay,
03:56no deductible, no co-insurance. These often include vaccines and many types of screenings.
04:02So take advantage of those.
04:04Co-insurance. Remember when I said that insurance would help cover costs that exceed your deductible?
04:08That's where co-insurance comes in. Co-insurance is a shared cost between you and the insurance company.
04:13So depending on your policy, it may say that after your deductible you pay 20% and your insurance company pays 80%.
04:20That's called an 80-20 policy. Now for the ease of math,
04:23let's say you have a 50-50 policy with a $4,000 deductible and you just had an $8,000 ER visit.
04:29You pay the first $4,000 to meet your deductible and then the second $4,000 would be split 50-50, meaning you'd pay $2,000 to that.
04:36So for that $8,000 ER visit, you'd be out $6,000.
04:41Individual out-of-pocket maximum. Out-of-pocket is the amount of money that you pay. This includes your co-pays, doctor's visits, co-insurance, deductibles,
04:49drugs. And the out-of-pocket maximum is
04:52your plan's cap on how much you have to personally pay towards your health care costs. After you hit that maximum,
04:58100% is covered by your insurance.
05:00Family out-of-pocket max. Based on what individual yearly out-of-pocket is, you can probably guess this one.
05:05It's the cap on the medical costs for a whole family. Now, let's bring back the three levels example from the beginning.
05:10Now you start on level one paying basically everything out-of-pocket. That is until you reach your deductible
05:15and that's when you go to level two.
05:17And that's where you're splitting the cost with your insurance company through co-insurance.
05:21If your medical expenses get so high that the total of what you paid reaches your yearly out-of-pocket maximum,
05:26you move to level three, where all further health care expenses for the rest of the year are
05:31100% covered by your insurance plan. When your plan resets for the year, you start back at the beginning.
05:36Usually this happens on January 1st,
05:38but some plans differ on their reset date. If you're still feeling unsure about what this all means or about your financial
05:44responsibility for your covered services, your local health care facility can often help you obtain and understand this information.
05:50Especially when considering an upcoming service or appointment.
05:52Hopefully this video has helped you feel a little more comfortable with the costs involved in your health insurance. Thanks for watching.