Insurance terms to know

A copay is a flat fee that you pay when you visit a provider. It is a set amount of money you pay for a covered service.

Healthcare services that are covered by a specific benefit provision of the health insurance plan, are not excluded under the plan. They are determined to be medically necessary per the plan’s medical policies and paid for by the plan.

A deductible is the amount you pay for healthcare services before your health insurance begins to pay.

An Explanation of Benefits is a statement that describes the costs of medical care received. It explains what portion of a claim (a request for payment submitted by your healthcare provider for covered items or services) was paid to the healthcare provider and what you will be responsible for paying. 

How to calculate out-of-pocket medical expenses

Out-of-pocket medical expenses can be calculated by adding all deductibles to the coinsurance dollar amount.

What costs can go towards meeting the out-of-pocket maximum?

Regardless of your health coverage, there are still some out-of-pocket costs. While not all costs will go towards your out-of-pocket limit, most cost-sharing does. Cost-sharing refers to the expenses you pay for covered medical prescriptions and services.

Who pays the health insurance premium?

If an employee receives healthcare coverage through their job, the employer will pay a full or partial monthly premium. Most companies will require employees to pay a certain percentage of the monthly premiums to be deducted from an employee's paycheck. The employer will then cover the rest of the payments.

If you are unemployed or self-employed and buy individual health insurance, you are fully responsible for the monthly premium payments. However, the ACA-compliant health plans provide premium tax credits or subsidies to enable people to buy individual coverage through the Marketplace. To qualify for tax credits, your income must not exceed 400 percent of the federal poverty level, and are unable to access affordable, basic coverage from your employer or your partner's employer.

What determines premium rates?

Many  factors affect the amount you pay in premiums. Even if two people obtain the same  insurance policy, they may not have the same premium amount, depending on the underlying factors. Some of the factors that can impact your premium rates for health insurance are  health conditions and lifestyle. These factors include:

• Age – Your age is one of the biggest determinants of your premium payments. Younger people often pay lower premium rates because they don't see the doctor regularly and have fewer health issues than older adults.
• Location – Your location will also impact your premium rates. For such factors as limited access to healthy food or even climate, Americans who reside in the same geographical area may have similar health risks. For that reason, insurers may consider your location when deciding your premium. Similarly, insurance services may only be available in selected areas, making it hard to find lower premium options.
• Plan category – Insurance plans are grouped into different metal tiers  such as Bronze, Silver, Gold, and Platinum. Each metal level is designed to pay a different percentage of medical costs, with the Platinum level attracting the highest premium while Bronze pays the least.
• Family size – If you're purchasing health insurance for your spouse or children, you will pay more for any member added to the plan.
• Tobacco use – Individuals who regularly smoke or use tobacco products are likely to pay higher premiums than non-tobacco users. This is because of their increased risk of diseases caused by excess use of tobacco products.