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A deductible represents the amount that you have to pay out of your own pocket toward healthcare services before your insurer starts to pay for covered services.

Out-of-pocket is the amount personally paid by the individual patient for incurred healthcare expenses.

A co-payment or co-pay is the fee you pay on initial rendering of services. While the purpose of the co-pay is to make consumers invest a nominal fee before utilizing healthcare, it has also trained us to equate the cost of the co-pay to the actual cost of services. This, however, is not the case. Remember, along with the co-pay, the patient may also be responsible for the billed amount or their portion of the insurance claim.

Co-insurance is how you and your insurer split the balance on the reimbursement amount after the deductible has been met. For example, if you have an 80/20 plan, you have to pay 20% of the remaining balance after meeting your deductible. You insurance will pick of the other 80%. So, if you have a bill that is $5,000 dollars and an 80/20 plan, after reaching your deductible, you would be responsible for paying $1,000 of that bill.

A maximum lifetime benefit is the limit on what your insurance will pay out for an individual’s comprehensive healthcare claims/costs over the course of the insurance relationship. Keep in mind, this is generally tied to a specific insurance and most insurance relationships last only 2-3 years. Although the maximum lifetime benefit is not commonly reached, a catastrophic event could push an individual to that limit.

When an insurer will not approve and/or pay for a treatment or service, it’s called a denial of service (also known as a denial of coverage or denial of claim).

A lapse of coverage is when a person is between insurances and without coverage. Often times, a lapse occurs because of the cost of coverage, and the policy is dropped as a short-term cost-savings measure. Keep in mind, if a health issue prompts a person to resume coverage, the insurer will often point to that lapse as the point in time during which an ailment manifested itself. Whether that is true or not, the lapse is often a very effective out for an insurer to deny coverage.

It is important to know that simply having health insurance does not mean you are adequately insured. Being appropriately insured can be a challenge. A person can find himself or herself underinsured in numerous ways: lifetime benefit is too low; deductible is too high; certain care is excluded; underfunded HSA and/or FSA account; lapse in coverage; pre-existing conditions not covered. If you find your coverage is not offering you the benefits you had anticipated, you may be underinsured. Check with your insurance company or broker to discuss your coverage/policy.