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Understanding premiums, deductibles, coinsurance and copays

Key takeaways:

 

  • A premium is the amount you pay monthly to keep your health insurance active.
  • A deductible is the amount you need to spend for eligible health care expenses before your insurance kicks in.
  • Coinsurance is the amount you pay after you meet your deductible. This is usually a percentage, such as 20%.
  • Copays are fixed amounts you pay for health services, such as doctor visits.

How do health plans work?

 

At Aetna®, we’re committed to helping our members understand how their health plans work — and how much they cost. When you understand the basics of health insurance, you can better manage your expenses. And make sure you have the health care you need, when you need it.

 

Here's a simple breakdown of the key parts of health insurance.

 

What is a premium?

Think of it as your health plan’s monthly subscription fee. It makes sure your insurance is there when you need it. You pay this amount even if you don’t use any health care services. This payment keeps your coverage active and lets you use the benefits of your health insurance plan.


Your age, your health status and the type of coverage you choose may affect your premium. Comprehensive plans that cover a wider range of services usually have lower out-of-pocket costs and higher premiums than more basic plans.

 

What is a deductible?

This is the amount you need to pay out of your own pocket for covered health services before your insurance starts to share the costs. For example, if your deductible is $1,000, you'll pay for all your medical services up to that amount. Once you've paid that $1,000, your insurance kicks in. For those with high-deductible health plans, you might consider setting up a health savings account (HSA) or other savings options to help you cover these costs.

 

Learn more about your health account options

 

What is coinsurance? 

This is when you and your insurance company share the costs of your care. Once you have met your deductible, coinsurance is your share of the costs for health services. This is calculated as a percentage. 

 

Let's say you have met your deductible and get health services that cost $1,000. With 20% coinsurance, you’d pay $200 (20% of $1,000). Your insurance company would pay the remaining $800. Coinsurance usually applies to services like hospital stays, surgeries, specialist visits and certain medicines.

 

What is a copay? 

These are flat fees you pay for certain health services, like visiting the doctor or getting prescriptions. You typically pay your copay at the time of service. For instance, you might have a $30 copay every time you visit your doctor. Or you might have a $15 copay for each prescription.

 

Copays are also a form of cost-sharing. They help control your out-of-pocket costs by creating a limit on what you’ll pay for services. Knowing your copays can help you budget for your health care expenses. 

Bottom line:

 

When you know how each part of your health insurance works, you can make better choices about your health care and your coverage. 

 

 

Content developed using AI and reviewed and edited by Aetna®

Legal notices

Aetna is the brand name used for products and services provided by one or more of the Aetna group of companies, including Aetna Life Insurance Company and its affiliates (Aetna).

Health plans contain exclusions and limitations. Check your plan documents for details.

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