When shopping for health coverage, it can sometimes be difficult to understand what you’re getting and the terms you’re agreeing to, especially if you do not fully understand the terminology being used. So, what’s the difference between co-insurance, co-payments and deductibles? Co-insurance usually refers to the provision in a health insurance policy which requires the insured to pay a specified portion of the health care expenses. The amount the insured will pay is usually based on a percentage or ratio, and is clearly defined in the health insurance policy terms and conditions. Co-payment involves the insured paying a flat rate upon entering a medical office to receive services or upon pickup for a prescription. Co-payments (also called co-pays) are generally a marginal cost (for example, $20 for a medical service and $10 for a brand-name prescription) compared to the cost of the services or prescription(s) received. Deductibles function a lot like co-insurance, described above, except that the insured pays their portion first (usually on an annual basis) before the insurance company begins to pay for medical services.

It is likely that you would have co-payments if you are part of a Health Maintenance Organization (HMO). While co-payment rates are generally very clear for medical office visits or for prescription drugs, they are not limited to the aforementioned scenarios. Understanding the fine print and what other services your co-payment may apply to can help avoid surprises. For instance, you may be accustomed to paying one flat-rate for medical office visits or prescription drugs; however, the rate may change if you have to be seen in an after-hours walk-in facility or if you must visit the hospital emergency room. You should also ask about the co-payment rate for these types of services, because the rates can increase substantially for unplanned visits to a healthcare facility. It’s also important to remember that some insurance companies combine co-payments with a deductible for the same health procedure.

The co-payment concept seems less confusing than its percentage based counterparts. However, when seeking online quotes for health coverage, be sure to shop around. It is also good to closely review the terms and conditions for inclusions and exceptions. Some policies require the insured to continue paying co-payments even after the amount of their deductible has been met, so be sure to review the out-of-pocket maximums associated with your policy. Understanding out-of-pocket maximums can also help with your budgeting for annual health coverage expenses. Online quotes allow you to easily compare rates and terms including the terms of your health insurance co-payment. Doing a bit of research and looking around online can save both time and money.