This post was written by the Parkview Employer Solutions team.
Health insurance can feel confusing and overwhelming. Phrases like "deductible," "copay" and "out-of-pocket maximum" are often used without clarification, leaving you unsure how your plan actually functions until you receive a medical bill. In this post, we’ll outline commonly used terms and explain how the different parts of your plan work together.
What is health insurance?
Health insurance is a contract between you and an insurance company. You pay a monthly fee (premium), and in return, the insurance company helps pay for certain medical services when you need care. Think of health insurance as your financial protection against large or unexpected healthcare costs.
Common language
To get the most out of your plan, it helps to be familiar with these foundational terms:
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Premium: The amount you pay each month to keep your health insurance active. You pay your premium whether you use healthcare or not. If you stop paying your premium, you can lose coverage. Your premium does not count toward your deductible.
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Deductible: The amount you must pay for covered healthcare services before your insurance begins paying its share. Some services, like preventive care, are often covered before you meet your deductible.
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Copayment (Copay): A fixed amount you pay for certain services, typically due at the time of service. Examples include $30 for a primary care visit, $50 for a specialist visit or $10 for a generic prescription.
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Coinsurance: The percentage of costs you share with your insurance company after you meet your deductible. For example, if you had a medical procedure that cost $1,000, your health plan might pay 80%, and you pay 20%. In this scenario, your insurance would pay $800, and you would be responsible for the remaining $200.
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Out-of-pocket maximum: The most you will pay in a year for covered healthcare services. Once you reach this limit, your insurance pays 100% of covered costs for the rest of the year. Paid deductibles, copays and coinsurance apply toward your out-of-pocket maximum. Premiums do not count toward your out-of-pocket maximum.
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In-network vs. Out-of-network: In-network providers have contracts with your insurance company and offer services at discounted rates, resulting in a lower cost to you. Out-of-network providers do not have contracts with your insurance company and usually cost you more.
Your plan-specific information
The best way to understand your specific health insurance plan is to review your plan documents and resources. Most health insurance companies offer an online health portal to access these resources:
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Summary of Benefits Coverage (SBC) is a standardized, easy-to-read document that explains what your health plan covers and how much you pay. The SBC is designed to help you compare plans and understand costs before you receive care. An SBC typically outlines:
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Your premium, deductible and out-of-pocket maximum
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Copays and coinsurance for common services
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What services are covered or not covered
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How to access in-network providers
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Examples of how the plan pays for common medical situations
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Provider directory is a list of doctors, hospitals, clinics and other healthcare providers that are considered in-network for your health plan. The provider directory helps you find in-network doctors and facilities and avoid unexpected out-of-network bills.
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Use the SBC and provider directory to decide where to receive care and what costs to expect, especially for planned healthcare services such as imaging, procedures and hospital stays.
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What determines plan coverage
Health plans can vary from employer to employer. Your plan’s specific details are selected based on several factors.
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Employer decisions (for employer-sponsored plans): If you receive health insurance through your employer, your employer plays a big role in shaping the plan. Employers balance coverage options with affordability for both the organization and the employees. They work with insurance carriers, health systems, and benefits advisors to decide:
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Which network of doctors and hospitals is used
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How high or low your deductible will be
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Copay and coinsurance amounts
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What additional benefits are included, like telehealth, wellness programs, employer clinics, etc
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Insurance carrier and plan design: The insurance company offers different plan designs, and your employer selects one or more of these options to make available to you. Each plan has its own structure for:
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Deductibles
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Copays and coinsurance
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Out-of-pocket maximums
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Covered services
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Federal and state requirements: Health plans must follow certain federal and state rules. These rules set a baseline for coverage, but employers can choose how generous the plan is beyond that. Federal and state regulations help ensure that plans cover essential services, such as:
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Preventive care
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Emergency services
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Hospitalization
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Prescription drugs
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Network agreements and pricing: Provider networks are built through contracts between insurance companies and healthcare providers. These agreements determine:
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Which providers are in-network
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Discounted pricing for services
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How costs are shared between you and the insurance company
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Employee feedback and utilization: You may notice your plan changes from year to year during open enrollment. Over time, employers may adjust plan offerings based on:
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Employee feedback
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How often participants use services
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Overall healthcare costs
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How to be a smarter healthcare consumer
Here are a few simple tips to help you better manage your healthcare costs and maximize your health plan benefits.
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Review your plan summary each year.
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Stay in-network whenever possible.
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Choose the appropriate level of care. For non-emergent needs, consider primary care, walk-in clinics or urgent care instead of the emergency room)
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Use your preventive care benefits.
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Ask for cost estimates before non-urgent services.
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Keep track of your deductible and out-of-pocket maximum.
Once you understand the basics of health insurance, you can make more confident decisions, avoid surprises and get more value from your benefits. If you ever feel unsure, ask questions to stay informed.
Who to contact for help with your health plan
If you have employer-sponsored health insurance, your HR team or benefits representative can explain your plan options and help answer questions. Contact the member services phone number on the back of your insurance card to be connected to a representative from your health plan who can assist with verifying your benefits, answering questions about claims and finding in-network providers.
Employee resources to support a healthy workforce
Parkview Employer Solutions partners with area businesses to deliver innovative services that improve employee health and well-being, including Signature Care, Employer Clinics, Workplace Wellness, Employee Assistance Program, Occupational Health and more. For additional information, please contact ParkviewEmployerSolutions@parkview.com.
