Medical Plans Part One: Making Sense of Common Terms

Open Enrollment season is upon many of us, which means making tough decisions behind choosing the right health plan.  With the emergence of clean and concise ways in presenting information, it would seem that choosing a health plan might be easy.  On the contrary, knowing what to look for when choosing a plan can seem rather overwhelming.

The key to understanding what to look for in a medical plan relies on a certain level of personal analysis.  One must look at their own medical history and make projections about what they anticipate to spend on medical care for the next year.

Once this personal evaluation has been made, one may begin to look at their plan options, and the summaries for each plan.  But, what are all these terms and how to they apply?  Let’s take a basic look at some of these terms and what they mean.

Premium – The premium is the amount that will be deducted from your paycheck each month (usually divided by pay period).  Think of the premium as what you are paying to be a member of that plan.  However, before jumping into the plan with the lowest premiums, consider these other terms.

Deductible – This is the amount that will need to be paid out of pocket before your insurance kicks in, helping you pay for your health care.  For example, if you have a $2500 deductible, and a $3000 bill from your doctor, you will be responsible for the first $2500, with your insurance provider covering either all or a partial amount of that remaining $500.

Out of Pocket Maximum – This is the maximum amount you will have to pay before your insurance completely takes over and begins to cover you 100%.

Co-Insurance – This is traditionally the amount that exist between your deductible and out of pocket maximum, where-in both you and your insurance provider pay a percentage of your medical costs.

Co-Pays – Your co-pay is a fixed amount that you pay for routine services, such as $30 for a doctor’s visit, or $5 for a generic prescription.  Co-pays exist without the need to hit your deductible.

In the next blog post- we’ll take a look at how to apply these terms and choose between two commonly offered medical plans.  Stay Tuned!

Need help choosing a medical plan?  Ataraxis is here to help you.  Simply email your questions to solutions@ataraxispeo.com or call and ask to speak with the Benefits Specialist.