Understanding Health Insurance:
Premiums, Deductibles, Copays and Out-of-Pocket Maximums

These terms describe how much you pay out of your paycheck, how much you or your insurance pays for doctor visits and the maximum you will pay per year.

These terms are important to understand so that you know how much your insurance plan is going to cost you. A deductible is a fixed amount of money that you must pay for medical expenses before your insurance coverage kicks in. This does not include the amount that is taken out of your paycheck each month (your premium), so the higher your deductible amount is, the lower your monthly payments. A copay is a fixed amount of money you must pay each time you visit the doctor. The out-of-pocket maximum is the absolute highest amount you’ll have to pay in a year for your medical expenses, in addition to your monthly premium.

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