When it comes to medical insurance, three important terms can greatly affect how much you pay: co-payments, premiums, and out-of-pocket costs. Understanding these can help you plan your healthcare budget wisely.
1. Premiums
Premiums are the fixed monthly payments you make to keep your insurance active. Think of them like a subscription fee—whether you use medical services or not, you must pay this amount regularly.
2. Co-payments (Co-pays)
Co-pays are small, fixed amounts you pay each time you receive a healthcare service. For example, you might pay a set fee for a doctor’s visit or prescription, while the insurance company covers the rest.
3. Out-of-Pocket Costs
Out-of-pocket costs include all the expenses you pay yourself, like co-pays, deductibles, and coinsurance. Once you reach your out-of-pocket maximum, your insurance usually pays 100% of covered services for the rest of the year.
