If you’re self-employed and looking for health insurance, you’re probably familiar with some key terms. You’re probably also tired of hearing a dictionary’s-worth of health jargon, much of which isn’t always clear. We’ve got you!
“Deductible” and “copay” are two of the most common health insurance terms, though many people aren’t totally clear on what they mean. We’ll walk you through the meaning of each and what to consider when you see these terms on different health insurance plans.
The quickest definition for a deductible is that it lets you know what you're paying out of pocket before your insurance kicks in to cover services. An important thing to note is that deductibles and monthly premiums tend to be inversely related. The lower the deductible on your health plan, the higher the monthly premium usually is.
Health insurance deductibles are different than other insurance deductibles (e.g. car insurance) in that the latter is usually applied per each claim, whereas health insurance deductibles cover the entire year.
Not every health service is related to your deductible, either. Many preventive services and, in some cases, primary care, are offered at no cost to the policyholder. This varies by coverage type, so be sure to check your certificate of coverage.
Deductibles can also be broken down by individual or family. Family deductibles may be one lump sum that applies to the entire family or each family member covered under the plan may have an individual deductible that goes toward the family deductible (i.e. a family of four may have a family deductible of $2,000 that breaks down to an individual deductible of $500 per member).
Typically, after a deductible is met, you share the cost of healthcare services with the insurance company. This is called coinsurance. Coinsurance is usually defined as a percentage of costs that you are responsible for, which usually breaks down as follows:
As an example, let’s say you have a silver plan that has a $2,000 deductible, and you have met the deductible. You took an awesome trip to the Sundance Film Festival and decided to take a day for skiing, but the slopes were brutal and you broke your leg. If the total cost for treating your leg was $2,500, you’d only be responsible for $750:
$2,500 X 30% = $750 (you pay)$2,500 X 70% = $1,750 (insurance pays)
A high-deductible health plan (HDHP) is exactly as it sounds: a plan that has a high deductible. These plans usually offer the lowest monthly premiums. HealthCare.gov describes such plans as having an individual deductible of at least $1,350 or a family deductible of at least $2,700.
These plans can be appealing for those who want to minimize monthly premium costs or who don’t anticipate having many health care needs throughout the year. Also known as “catastrophic health plans”, these are meant to protect people if the worst happens. If you have a medical emergency resulting in tens of thousands of dollars in medical expenses, you can get coverage for any covered health services that go over the deductible. On the other hand, you also typically pay for all health care costs out of pocket until the deductible is met, which can still amount to several thousands of dollars. Some people choose to combine an HDHP with a health savings account (HSA), the latter of which lets you pay for qualifying medical expenses with contributed funds that are not subject to federal income tax. It’s one way to minimize routine health care costs while still maintaining coverage for worst-case scenarios.
A copay, short for “copayment”, is a fixed amount you pay to a provider for a covered service. Copays tend to vary, depending on the service required. For example, an office visit to a doctor may have a $20 copay, which must be paid before the service is rendered. A copay for a specialist visit may be a little higher, between $30-$50. The general rule of thumb is that routine visits and exams, the copays tend to be lower (e.g. annual checkups, mammograms, gynecological exams). Exams or treatments that are more specialized (for a specific condition, perhaps) tend to have higher copays.
In some cases, copays are only paid after the deductible is met. It’s also worth noting that many plans cover basic services (annual checkups, preventative screenings, etc.) even before the deductible is met.
Copays and deductibles are both features of health insurance plans and dictate how much the insured pays for health services, though amounts and frequencies vary. A copay is a fixed amount paid by a patient for receiving a particular health care service, with the remaining balance covered by the person's insurance company. A deductible is a fixed amount a patient must pay during a given time period (usually the plan year) before their health insurance benefits begin to cover the costs.
Generally, plans that charge lower monthly premiums require higher copayments and higher deductibles, while plans that charge higher monthly premiums have lower copayments and lower deductibles.
In general, the deductible represents the total amount you will have to spend on covered health care services before your health coverage starts to kick in. The copay is a smaller amount you are responsible for.
Copays may not be applied toward the deductible under certain health care plans. That means that if you have a chronic illness or injury that requires multiple specialist or doctor visits, you may be racking up out-of-pocket costs that don’t apply to your deductible, leaving you on the hook for a long health care bill.
When it comes to Decent healthcare plans, the name of the game is affordable, comprehensive healthcare coverage. Our Trailblazer silver plan (the most popular plan) has super low copays for many services compared to other traditional silver plans. Our deductibles are lower, too! Our trailblazer plan has a $4,500 deductible, which can be as much as 40% lower than traditional silver plan deductibles.
The coolest part is that we offer 100% free primary care. No copays for visits with your primary care physician. You don’t have to wait until you reach your deductible. Just go to your primary care physician whenever you want and pay $0. We believe the doctor-patient relationship sits at the center of healthcare, so we’ve designed our plans around it.
For more information about our healthcare plans, visit Decent.com and get your free quote today!