What is the difference between Premiums, Copays and Coinsurance?

Deductibles and Other Out-of-Pocket Costs

Navigating health insurance can be tricky, especially when understanding key terms like deductibles, premiums, copays, and coinsurance. Here's a breakdown to help clarify these concepts:

• Premiums are the regular payments you make—usually monthly—to keep your health insurance coverage active. Think of it as a subscription fee for your health plan.

Copayments and Coinsurance

Beyond deductibles, you may also pay other out-of-pocket costs like copayments and coinsurance.

• Copayments are flat fees, such as $20 for a doctor's visit, that you pay at the time of service. These are typically consistent amounts for specific services or medications.

• Coinsurance is a percentage of the cost of a service. For instance, if your coinsurance is 20%, you pay 20% of the service cost, while your insurer covers the remaining 80%.

Most health plans also have an out-of-pocket maximum—a limit on what you’ll pay for covered services in a year. Once you reach this cap, your insurer covers 100% of your costs for the rest of the year.

Understanding Deductibles

It's important to note that copays and coinsurance don’t count toward your deductible. Only the amount you pay for health care services, like the medical bill you receive, contributes to meeting your plan’s deductible. This means that while copays and coinsurance are part of your overall expenses, they do not reduce the deductible you need to fulfill before your insurance kicks in fully.

By grasping these elements, you can better manage your health care expenses and make informed decisions about your coverage.

At Aura Insure, we’re here to help you weigh your options and find the plan that best matches your healthcare needs and financial situation.