One of the easiest ways to understand health insurance is to think about cost sharing.
| Cost | What it means |
|---|---|
| Premium | What you pay to maintain insurance coverage |
| Deductible | What you may pay for certain covered care before the plan begins sharing costs |
| Copay | A fixed amount for a covered service |
| Coinsurance | A percentage of the cost of a covered service |
| Out-of-pocket maximum | A limit on certain covered costs during a plan year |
These costs can work together.
For example:
First: You pay your monthly premium.
Then: You receive medical care.
Next: Depending on the service and plan, you may pay toward your deductible.
After the deductible: You may pay copayments or coinsurance.
Finally: If you reach the applicable out-of-pocket maximum, your plan may pay 100% of covered services for the rest of the plan year.
The actual process depends on the policy.
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