What does deductible mean?
A deductible is the amount of money you have to pay before your health insurer (or auto insurer or homeowners insurer) begins providing you with coverage. For example, if you have a $500 deductible, you will not receive any payments from your health insurer until you’ve spent at least $500. Deductibles normally reset annually, so you’d have to spend $500 per year on qualifying medical expenses in this example. Typically, the higher the deductible, the lower the cost of insurance. Some insurers have no deductibles while others have deductibles equal to several thousand dollars (these are normally called “high-deductible” health plans).

What does co-insurance mean?
Co-insurance refers to the percentage of medical costs that you are required to pay under the terms of your health insurance policy. When your policy has a co-insurance provision, it is normally expressed in terms of a ratio such as 80-20. In this example, the insurer would pay 80 percent of your covered healthcare costs and you would pay the remaining 20 percent of your costs.  The insurer begins paying their percentage of costs after you’ve already paid your deductible (if your policy has a deductible) and you will be responsible for yours up to the coinsurance limit, at which point your insurer becomes responsible for paying for 100 percent of the cost of care up to policy limits.

What is a lifetime limit?
A lifetime limit is the maximum amount of insurance coverage you have, or the maximum that the health insurance company will pay out. After the passage of the Affordable Care Act, lifetime limits will no longer be applicable and you will not be able to get cut off from medical coverage even if you incur very large expenses.

What is a pre-existing condition?
A pre-existing condition is a medical condition that you have before the time when you become covered by an insurance policy. For example, if you have diabetes but no insurance, when you later decide to buy insurance, your diabetes will be considered a pre-existing condition. Many insurance companies have limits on coverage for pre-existing conditions, although this too is changing as a result of the Affordable Care Act.

What is a premium?
Premium refers to the amount that you will pay for your health insurance coverage. A number of factors affect your premium. One of the most important factors is whether you are insured as part of a group policy such as policies offered by employers (these are the lowest cost policies) or whether you have an individual policy that you simply buy for yourself or your family. Other important factors in determining your premiums include your age, your current health status, any risk factors that make you more susceptible to serious illness, your deductible, your co-insurance agreement, and other considerations that affect the likelihood of the insurance company having to pay a large bill for medical expenses for you.

You should not always assume that the insurance policy with the lowest premium is best. At Selected Benefits, we can help you to evaluate all of the factors involved in choosing a Texas health insurance policy so you can get a policy that is the best value. Premiums on insurance purchased through Selected Benefits are the same as premiums on policies placed directly through insurance companies.