Premiums, deductibles, coinsurance — oh my. 😱 Picking a health insurance plan can feel like decoding a foreign language, especially if you’re new to the working world or haven’t had to use health insurance very often. But understanding just a few key terms can make a huge difference when it comes to choosing the right plan for your needs and budget.
Let’s cut through the jargon and get to the good stuff.
Premium: When you sign up for a health insurance plan, you and/or your employer will pay a monthly premium to keep the insurance plan active. This premium will be paid every month for the benefit of insurance coverage — regardless of whether you visit the doctor or utilize healthcare services.
Deductible: The amount you pay out-of-pocket before your health insurance will help pay claims. Deductibles can vary widely depending on what kind of health plan you have, but can range from several hundred to several thousand dollars. Here’s how a deductible works: If you go to the doctor and have a checkup and some tests that cost $425, and your deductible is $1,000, you will pay the full $425 for that visit and you would have $575 left to pay before your insurance begins helping pay for costs.
Co-payment: A fixed amount ($30, for example) you pay towards certain services like doctor’s and specialist visits. There is typically a co-payment for regular doctor’s visits, and then there might be a slightly higher co-payment for specialist visits, like the dermatologist, gastroenterologist, or emergency room visits.
Co-insurance: The percentage of costs of a covered health care service you pay towards (20%, for example) after you’ve paid your deductible. Again, let’s say you have a $1,000 deductible. After you’ve paid health care costs of $1,000, your insurance will start paying 80% of every claim while you pay 20%. You’ll continue paying this “split” with your insurance company until you’ve met your out-of-pocket limit for the year.
Out-of-Pocket Limit: The maximum amount you could pay during the coverage period for your share of costs, including co-payments and co-insurance. In 2025, the maximum out-of-pocket limit for individual ACA coverage is $9,200 ($18,400 for a family). Bronze plans tend to have higher out-of-pocket limits and lower monthly premiums, while Gold plans have lower out-of-pocket limits but higher monthly premiums.
In-network: Refers to healthcare providers who have contracts with your insurance company to offer services at a discounted rate. Using in-network providers will cost you less out-of pocket. You can search for in-network providers on your health plan’s website.
Out-of-network: Refers to healthcare providers who do not have contracts with your insurance company to offer services at discounted rates. Using out-of-network providers will most often cost more out-of-pocket, or may not be covered at all (except in emergencies.)
Essential Health Benefits: A set of services that healthcare plans must cover under the Affordable Care Act. These include doctors’ services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and more. Some plans cover more services than these minimum essentials. Plans must also offer dental coverage for children. Dental benefits for adults are optional.
Individual vs Family Limits: Health insurance plans have different costs for individuals versus families for premiums, deductibles and out-of-pocket limits. For example, your individual out-of-pocket limit could be $5,000, but the family limit could be $15,000. So, you’ll want to pay attention to those three limits if you have multiple people on your plan.
Open Enrollment: The annual period when you can enroll or change your healthcare insurance coverage. During open enrollment, you can enroll in a new plan, change or cancel your plan, or add/remove other people to your plan. Open enrollment is usually for a few weeks at the end of the year, and changes are effective for the upcoming new year.
Choosing a health insurance plan isn’t just about picking the lowest price or the biggest network. It’s about finding the right balance of coverage and cost for your situation. And the more you understand the language of insurance, the more confident you’ll feel when it’s time to choose.