Health insurance plans can be complicated and confusing so it's essential to understand key terms so you can make informed decisions. Below, we define three important insurance terms you need to know when it comes to understanding how much you'll owe for a medical service: deductible, copay, and coinsurance.

The deductible is the amount you have to pay out of pocket before your insurance starts chipping in. Depending on your policy, your deductible may apply to all services or just certain ones, such as prescriptions or specialist visits. Deductibles are usually paid annually but may also be paid on a monthly basis. Once you meet your deductible amount, most policies will cover all or part of your medical expenses for the remainder of the year.

For example, if your plan’s deductible is $3,000, you’re responsible for paying all of your health care costs up to $3,000 within the year, after which point your health plan begins to share the cost of covered services.

Out-of-network vs. in-network deductibles

If your plan includes out-of-network benefits (i.e., some insurance coverage for providers who aren’t contracted with your insurance company), you’ll likely have a separate, and higher deductible to meet if you use out-of-network services—even if you’ve already met your in-network deductible.

A copay is a fixed amount you pay up front each time you receive care or fill a prescription. For instance, your insurance plan may have a $25 copay for a doctor’s visit, or a $50 copay for a visit to a specialist, which you’d typically pay at the time of your appointment. Depending on your type of health insurance, your copays may or may not apply toward meeting your annual deductible.

Do you always have a copay?

Not always. Some health plans may use both copays and/or deductibles or coinsurance (see below). It can also depend on the type of service you receive. Many plans cover preventive services like annual physicals, mammograms, vaccinations, etc. without copays— at least for in-network providers.

Coinsurance is the percentage of medical costs you pay after you’ve met your annual deductible. That amount varies by plan. If your coinsurance is 30%, it means that once you’ve paid your full deductible, you’ll pay for 30% of the healthcare you receive after that, and your insurance plan will pay for 70%.

Let’s put that 30% coinsurance into an equation. Say you have a $2,000 CAT scan, and your deductible is $1,000. Once you’ve paid the $1,000 deductible, you would be responsible for 30% of the remaining $1,000—which is $300. Your insurance company would be responsible for 70% of the $1,000, or $700.

Thankfully, there’s a cap to how much you'll pay out-of-pocket

With coinsurance, you’re responsible for a smaller percentage of your medical costs than your insurance company but even so, the prospect of a massive bill is daunting. 30% of a lot is still a lot! Luckily, every insurance plan has an out-of-pocket maximum. Once you hit this limit, the insurance company will pick up 100% of your covered costs for the rest of the year–at least for in-network services. And as you might expect, your coinsurance for in-network services is often less than your-coinsurance for out-of-network services.

Refer to this article for in depth details about the cost of Lief Rx services. We recommend calling your health plan to check your plan's coverage. At that time you can also gain a more specific understanding of your potential financial responsibility (e.g., deductible, co-pay, co-insurance, etc.).