Deciphering insurance terms can be like learning Sanskrit. To help, we translated some of the most common terms into (we promise!) plain English.
Premium
This is what you pay up front for health insurance, usually in the form of a monthly payment withheld from your paycheck.
Deductible
This is how much you have to pay for care out of your own pocket before insurance kicks in. Premiums are usually lower when deductibles are higher.
Copayment
This is a flat fee you pay for a service at the doctor’s office or hospital.
Coinsurance
This is your share of the final bill for covered care. After you meet your deductible, and pay a copay, your insurance will pay a percentage of the bill, 80% for example, and you’ll pay the coinsurance, the other 20%.
Network
This is the group of doctors, hospitals, and labs that are “preferred” by your health plan. You’ll usually pay less for these providers. Some plans let you go out of network for higher rates.
Out-of-Pocket Maximum
This is the most you’ll need to pay in a plan year.
FSA
A flexible spending account lets you set aside pretax money
to spend on certain health expenses. It’s capped at $2,700, and you typically have to use it all in one year.
HSA & HRA
A health savings account (HSA) lets you save money to use for health care expenses, but can also be used for other expenses once you reach 65. There’s a limit to how much you can contribute, but you don’t pay tax on the money you put in or the interest you earn, which builds year over year. A health reimbursement account (HRA) is similar, but it’s funded by your employer, and you can’t take it with you when you leave. Both accounts are usually paired with a high- deductible plan to help offset the higher costs.
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