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Don’t know a deductible from a “donut hole?” You’re in the right place. We’re decoding common insurance lingo so you can get the most out of your plan.
We get it. The moment someone starts talking about “copays” and “out-of-network coverage,” your eyes may start to glaze over, and your brain may suddenly be able to only process vague sounds and syllables. This is hardly unusual.
In fact, a 2019 UnitedHealthcare® survey found that just 6% of consumers could correctly define common terms like “deductibles,” “premiums,” “co-insurance” and “out-of-pocket maximum.” These concepts might seem dense, but we promise, it’s worth the time to learn them. Understanding what they mean can help you make smarter decisions when choosing a health care plan, saving you tons of effort down the line. Here’s a quick breakdown of six important terms that will help get you up to speed.
Premium = The Monthly Amount Paid for Your Health Insurance
Think of your health insurance like a monthly membership: The premium is the fee you pay every month to be a member.
That’s similar to any kind of arrangement where you pay monthly dues, like your favorite streaming entertainment service or your local community center. With health insurance, your monthly premium allows you to get the benefits and services offered by your plan. That usually includes important preventive care at no cost, such as:
- Annual Physical and Wellness Visit
- Screenings for diseases like breast and colon cancer
- Flu shots and other vaccinations
Some UnitedHealthcare Medicare Advantage plans have a $0 monthly premium, although you will have to keep paying your Medicare Part B premium. Check your plan’s website or call the toll-free Customer Service number on the back of your member ID card if you don’t know the amount of your monthly premium.
Finding Your Plan Benefits Is as Easy as 1, 2, 3
Think of your plan’s website as Grand Central Station for everything related to your plan coverage. To check your benefits:
- Go to MyUHCMedicare.com.
- Sign in or click Register Now to create an online account.
- Click Coverage & Benefits to see a recap of your plan’s benefits.
Deductible = The Amount You Could Owe Before Your Plan Begins to Pay
If you need more than preventive care — for example, you have a health concern based on symptoms you’re having or you need to go to the hospital — that’s when a deductible may come into play.
Not all plans have a deductible for medical services. For those that do, the services that apply toward the deductible, as well as the deductible amount, can vary by plan. With a deductible, you’ll know upfront what the yearly cost might be, and it’s what you’ll pay before insurance starts to pick up part of the tab.
Here’s an example of how that might look in the real world: One day, you slam your hand in the car door and need to have an X-ray and treatment. Your provider also orders follow-up visits with a physical therapist to help you regain mobility in your hand. The bills you receive tally up to, say, $1,700.
If your yearly deductible is $1,000, your plan won’t pay anything until you’ve paid the first $1,000 yourself. Remember, the deductible may not apply to all services. After you’ve met your deductible, the remaining $700 will be covered by your insurance, minus any copays or coinsurance you pay. You’ll continue to pay copays or coinsurance until you reach the annual out-of-pocket maximum.
Copay and Coinsurance = Your Share of Your Health Expenses
With Medicare Advantage plans, after any deductibles have been met, the primary way you share the costs for your care is in one of two forms, copays or coinsurance. Here’s the difference:
Copays. A copay is a fixed amount (for example, $15) that you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.
Don’t worry, you won’t have to do any math. UnitedHealthcare Medicare Advantage plans keep it simple by charging one copay for in-network primary care provider services. You may pay a slightly higher copay for other types of care, such as specialist visits, hospital care, diagnostic tests and imaging services. You can find these figures by checking your plan’s website.
Coinsurance. Though copays are more common, Medicare Advantage plans may set coinsurance terms for some services. Coinsurance is when you pay a percentage of the total cost for a covered health care service or medical item. For example, if you’ve sprained your ankle and need crutches to help you get around, your plan may ask you to pay 20% of the cost of those crutches, while they pay the remaining 80%.
The copay and coinsurance level has a limit, just like hitting your deductible. Once you reach this point — which also depends on your plan’s specifics — your insurance will pay all costs for covered services for the rest of the year.
Out-of-Pocket Maximum = The Most You’ll Pay for Covered Services in a Year
You will continue to pay your copay or coinsurance until you reach the out-of-pocket maximum. Again, the figure varies by plan, but here’s how it works: Let’s say your out-of-pocket maximum is $3,000. Once you’ve met your $1,000 deductible, plus paid an additional $2,000 in copays or coinsurance for covered services, you’ve reached your out-of-pocket maximum. From then on, covered services are paid for in full by your plan.
It’s important to note that the out-of-pocket maximum only applies to Medicare-covered services. It does not apply to premiums, prescription drug costs, or to any additional benefits not covered by Medicare (like eyewear and hearing aids).
Knowing your out-of-pocket maximum at the beginning of the year is helpful. It may be useful for planning how much money you’ll need to have on hand to pay for unexpected health expenses.
In-Network = Contracted Providers That Will Save You Money
Most UnitedHealthcare Medicare Advantage plans have a network of providers, hospitals, pharmacies and facilities. Depending on what kind of plan you have, going outside of the network — for instance, if there’s a specialist you want to see, or you’d like a second opinion — means you may have to pay the medical costs in full yourself, or at least a portion of them.
If you stay with network providers only, your costs are usually lower. For more information, read 7 Things You Need to Know About Your Medicare Advantage Plan here.
Drug Coverage Stages = Determines What You’ll Pay for Your Prescriptions
If your plan includes Part D prescription drug coverage, your pharmacy benefit is separate from your other medical services. The amount you’ll pay at the pharmacy can get a little more complex based on what coverage stage you’re in when you fill your prescription. In general, if your plan has a deductible, you’ll pay for your drug costs until you reach your deductible dollar amount.
If you spend more than your annual deductible, or if you don’t have a deductible, you’ll be in the Initial Coverage stage. In this stage you will pay a copay (fixed amount) or coinsurance (a percentage of the total cost) for your drugs until the total drug cost (the amount paid by you and your plan) reaches $4,130 in 2021. The actual amount depends on the medications you take while in this stage. On your plan, medications are assigned to a drug tier, which tells you what your copay or coinsurance will be. You can find this information on the Pharmacies & Prescriptions page of your plan website.
There’s another stage you may know: Coverage Gap stage, sometimes called the “donut hole.” Here’s how it works: Once you and your plan have paid $4,130 in total drug costs you’re in the coverage gap. In this stage you pay 25% of the cost of generic and brand-name drugs until your total out-of-pocket costs for the year reach $6,550 in 2021. The dollar amounts in this stage can change each year.
Finally, there’s the Catastrophic Coverage stage. After your total out-of-pocket costs reach $6,550 in 2021, you enter this stage and pay a smaller copay or coinsurance for the rest of the plan year.
To get the full rundown of your pharmacy benefits, check out the 5 Things to Know About Your Prescription Drug Coverage here. Your cost may be less if you receive Extra Help from Medicare.
Learn What You’ll Pay for Prescriptions
Find out what coverage stage you’re in and what you can expect to pay at the pharmacy by signing into your plan website and visiting the Pharmacies & Prescriptions page.
This information is for educational purposes only and is not a substitute for the advice of a provider. Consult your provider prior to beginning an exercise program or making changes to your lifestyle or health care routine.
Benefits and features vary by plan/area. Limitations and exclusions apply.