What is Health Insurance?

June 1, 2017

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What is Health Insurance?
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Understanding The Key Terms Used Within Health Insurance

Health Insurance can seem confusing and frustrating to understand completely. Let's start with the basics. Health Insurance is used to cover some, if not most, of your medical needs through insurance premiums each month. These insurance premiums are paid by you and or your employer.

Let's take a look at other typical terms used within Health Insurance:

Copayment: A copayment is a fixed dollar amount that you must pay for receiving a medical service. For instance, you most likely pay a copayment when you visit the doctor or go to the emergency room.

Deductible: A deductible is the amount of money you pay for your health services before insurance starts covering it. For example, if you have a $3,000 deductible then you pay the first $3,000 of medical services before your insurance kicks in.

Allowed Amount: An allowed amount is the maximum amount of money your insurer will pay for a medical service. Allowed amount can also be known as “eligible expense,” “payment allowance,” or “negotiated rate.”

Coinsurance: Coinsurance is the percentage of cost you cover for health services after you have finished paying your deductible. So if your coinsurance is 20% and your allowed amount for a doctor's visit is $100 then you pay $20 and your insurance covers the rest of the cost.

Want to learn more? Check out the Healthy UNH website for more information.

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