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​Understanding Your Insurance Policy

Written By: Rachel Cullor

Date: April 16, 2015  

Deductible? Copay? Coinsurance? What do these words mean? Not many people that we have talked to can say that they sat down and actually read through the insurance policy that they received after first signing up for an insurance plan.

The insurance industry uses a plethora of terms that can be confusing to the consumer. Understanding some of the more common terms will help you understand how your insurance plan is set up and how it will function when you use it. The following terms are in every policy, and knowing what they mean is beneficial not only for understanding the plan you currently have, but also helping you pick new plans in the future.

Deductible. This is the one where we see the most confusion. A deductible is the amount you must spend out of your own pocket before the insurance carrier will start helping to pay for expenses. It is important to know that the deductible resets every year, usually in January. Note: On some plans, certain benefits, such as doctor visits or prescriptions, will not be subject to the deductible. They may have a copay. (Don’t worry, an explanation for that one is on the way.)

Maximum Out of Pocket (MOOP). This is the limit of how much you could end up owing for medical expenses on the plan during that year. Once it is reached, you cannot be charged for any other medical expense that is covered by the carrier. Like the deductible, the MOOP resets every year as well. Note: If your plan has an out of network option, as well as the in network option, you will have two separate deductible and MOOP’s; one for each network.

Coinsurance. This is the term given to the percentage that the insurance company will pay after the subscriber has met the deductible. Note: The coinsurance percentage is flexible. There can be a different percentage assigned to different benefits, as well as a different percentage for different networks. For example, the plan might pay 20% for a doctor visit while an ER visit might be paid at 50%.

Copayment. This is what the subscriber pays for certain services, such as a visit to the doctor or a prescription. It is a fixed amount. Note: Copays do not count toward the deductible, but will count toward your MOOP.

Network. In order to get the best bang for your buck, it is always recommended that you try to stay in your plan’s network. Some types of plans only are accepted by doctors and hospitals in the network, while some plans are more flexible and allow you to seek care outside the network, usually at a higher cost to you.

By becoming more familiar with those terms in your policy, you will be able to better understand how your plan works and what will be expected of you when using your insurance. And, as always, our agents at ​American Exchange can help you go over your plan. Part of our job is to explain the plans so that the buyer has a clear understanding, and we have been told we are great at it. So, instead of googling all those terms you need help with, make a FREE call to an American Exchange agent instead. You won’t regret it.

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