When reviewing a health insurance plan, most people notice the deductible amount. While this is a significant factor when choosing a health care plan, it's not always understood. You and your health insurance pay for health care expenses. Understanding what you are expected to pay may not always seem straightforward.

A deductible is the amount of money that you pay for health care services before the insurance will start to cover the costs. For example, if your deductible is $1,5000, then you'll be responsible for paying 100% of eligible health care expenses until you reach that amount. After that, you'll share the cost of the plan by paying coinsurance.

The deductible will vary depending on your plan but usually a higher deductible results in a lower monthly cost for insurance. The deductible amount resets itself every year.

Coinsurance Costs

Coinsurance simply means that you and your health insurance will share the costs of a service. It's usually calculated as a certain percentage of the amount charged for a service. You start to pay for coinsurance after you've paid the deductible. After you meet the deductible, then, instead of paying all costs, you may be responsible for 30% of the cost. This means that your insurance plan will pay the extra 70%. Coinsurance varies greatly so it's important to look at what you can be expected to pay.

Copayments

A copay is another type of payment that you may have. This simply is a set amount that you pay for a health care service that's typically paid when you receive the service. Your copay will usually be higher or lower depending on the type of service. For example, you may have a higher copay for specialist and a lower copayment for a general practitioner.

Your healthcare plan will determine what your copayment is for different types of services as well as if you have one. You may have a copayment before you've finished paying the deductible. You may still have a copayment even after you pay your deductible so be sure to review this part of your plan.

Choosing a Deductible

Although you don't get to specify the amount of your deductible, most health care plans give you a few options when it comes to choosing a deductible. In most cases, the more that you're willing to pay for a deductible, the lower the premium cost. If you're willing to pay higher out-of-pocket costs when you need care, you'll save on what you have to pay each month. The opposite is also true. If you have a lower deductible, you'll have higher monthly premiums but your plan will start to share costs sooner since you'll likely reach the deductible sooner as well.

Although there isn't one correct amount to have for a deductible, there is a big difference between one that's $500 and one that's $5,000. You should only choose a deductible that you could pay if you had to cover this cost out-of-pocket and all at one time. Most people review the pricing structure to get the best fit for their needs.