Understanding the Intricacies of Health Insurance

Premiums are payments you make to keep your plan in effect. Usually, premiums are paid each month. Premiums are set by your insurance company and based on factors like age and where you live.

The deductible is the dollar amount you are responsible for before your plan begins coverage. Most health plans let you choose your own deductible, so how do you choose the amount that's best? It might seem like a lower deductible would be better, but a low deductible means you'll have to pay higher monthly premiums and vice versa. You'll have to decide if you want lower monthly premiums or lower medical bills for your health care.

If you have an HMO, you might pay $15 at the doctor's office for a check-up. That's called your copayment. You pay a certain dollar amount of the bill and your plan covers the rest. HMOs offer copayments as low as $10, while PPOs often charge copayments of $40 or less. Co-insurance is similar to a copayment except it's expressed as a percentage rather than a specific dollar amount. A co-insurance rate of 80/20 means you'll be responsible for 20% of a medical bill.

In the event you have a year of high medical expenses or a catastrophic event or illness, this is the most money you can spend on network-provided healthcare not including your premium. Because these are non-Medicare plans, prescription medication is also covered by this maximum expenditure limit.