Health insurance policies vary widely in terms of covered benefits, cost sharing, and other terms-so widely, in fact, it can be hard for consumers to tell how coverage works.
Terms and definitions are not generally consistent across policies, even for the most basic and prominent features.
This guide defines some of the most important features of insurance plans that consumers might try to compare.
Coinsurance: A percentage of allowed charges for covered care that consumers are required to pay.
For example, the health insurance might pay 80 percent of covered charges leaving the patient to pay 20 percent coinsurance.
Co-pay: The co-pay is a flat dollar amount that the patient must pay per covered service.
For example, a health plan might require a $15 co-pay for each generic prescription drug but a $25 co-pay for brand name prescription drugs.
Deductible: The annual deductible is an amount that patients must pay for covered care before health insurance reimbursement begins.
However, insurers structure and apply deductibles differently.
Under one policy, all covered care might be subject to a single, comprehensive deductible, whereas separate deductibles might apply for specific services such as hospitalization or prescription drugs.
Under certain policies, some covered services-such as office visits-might be exempt from the deductible and patients might instead pay a co-pay.
Under other policies, office visits might be subject first to the deductible; co-pays would then apply once the deductible is satisfied.
Exclusions: Exclusions refer to specifically listed items or services that a health insurance policy doesn't cover.
Covered benefits, exclusions, and limits vary as well.
For example, most health insurance covers prescription drugs, but some policies exclude the benefit while others cap it, and cost sharing varies both across plans and by type of drug.
Out-of-pocket limit: The out-of-pocket, or OOP, limit generally signifies the maximum amount of cost-sharing patients will be required to pay for covered services in a year.
As such, the OOP provides an overall indication of the financial protection health insurance will provide in a year.
Yet, under many policies, the OOP does not limit all cost sharing.
The annual deductible(s) might not be included in the OOP.
Co-pays for some or all services also might continue even after the OOP has been satisfied for the year.
The OOP usually limits coinsurance, although under some plans, even coinsurance for certain services, such as prescription drugs or mental health care, is not constrained by the OOP.