Copay? Coinsurance? Health Insurance Decoded

Here is the problem: We go shopping for shoes. You know your shoe size, which probably isn't going to change in the future. You might even know the occasion you want to wear the shoes for. You know that if you pay $50 today, you will get the shoes. If you want to return them? Go ahead, you have a 30 day window. (Unless you snagged that deal on sale) That is it. Simple shopping principles. Shopping for health insurance? Not as easy, it basically breaks all of the simple shopping principles we have come to know and love.

When shopping for healthcare you really have to predict your future healthcare expenses. How can you predict if you plan to break your leg or come down with the flu? You cant. (Isn't this fun already?) So you are technically gambling on how much healthcare you will need during the year. You may lose money if you are healthy, or benefit from healthcare if you are overly in need of surgery.

Copay? Coinsurance? Deductible? Why do they make health insurance so confusing? At a minimum, you have to know key terms to understand the process:

Copay- a fixed dollar amount you pay everytime you get a certain service. For example: When I go to the doctor I have to pay $20 for a visit. The cost after that? who cares- the insurance company will pay for it. This works for prescriptions ($5 per prescription) and other benefits.

Coinsurance- a percentage amount. "20% coinsurance". If the total doctor bill is $100, I will pay $20 and the insurance company will pay $80. It suddenly matters what the doctors bill actually is.

Deductible- this is a set amount that you have to pay before you get covered. "$200 deductible" would mean that I would pay $200 of my TOTAL health insurance bills throughout the year before insurance kicks in and they take over the bills.

When trying on shoes you can ask a friend if they like them or what kind of shoes they have. With health insurance it is not quite the same thing. Every person is different and have different needs. The amount of insurance you need will vary from your friend. Look into the plans and figure out what YOU need. Remember that it is really just a gamble for the year. Key questions to ask yourself: Do I go to the doctor every year (you should)? Do I go to the dentist? Do I need contacts? Do I have normal prescriptions? Any major surgeries that I already know about?

In a perfect world, we would just not get sick. In this world, it is simply better safe than sorry... but make sure you know what you are doing because $75 out of your pocket each month to your health insurance is worth looking into.