A premium is the amount paid each month to have your plan regardless of whether you "use" it or not.
A deductible is the amount you pay for health care before your insurance kicks in. For example, if your deductible is $1,500, you will pay the first $1,500 in medical bills out of your own pocket.
Deductibles are cumulative over the course of a calendar year – each time you pay a small bill, it counts towards your deductible. Once you've reached your deductible, your insurance will begin to pay the majority of medical expenses. Each year on January 1st, your deductible resets and you start all over.
Before Deductible and After Deductible
Almost health insurance plans have a before-deductible and after-deductible benefits structure. Simply put, the plan acts a certain way before the deductible and then changes after you reach the deductible.
Here's an example: Let's say you're viewing a plan with a $1500 deductible that has primary care doctor visits listed as "full price" before the deductible and a $40 copay after the deductible. In this scenario, during the year you have a few visits to your primary care doctor paying full price (maybe $50-150) and then you incur a few other medical expenses that surpass your $1500 deductible. Any visit to your primary doctor after that would be a $40 copay.
Eventually, if you reach your maximum out-of-pocket, the insurance will cover all medical costs pending you keep paying your premium.
Every time someone in the family pays for medical care, that cost will go toward the family deductible. But it will also go toward the individual deductible of the family member who received care.
If that family member hits their individual deductible, insurance will kick in and begin to share the cost of medical care for them (and them only). Everyone else in the family will still be responsible for paying for care out-of-pocket until they've either met their own individual deductible or the family fulfills the family deductible.
A copayment is a flat-fee you pay for treatment. Copays are a type of coinsurance, only they are a flat-fee rather than a percentage. You usually pay copayments when you check-in at a doctor's office, another medical facility, or get a prescription (unless you're receiving free preventive care services). A copay is often a small amount (like $20 for a typical doctor's visit).
Coinsurance is the percentage of the bill you pay. After you have paid your deductible, your insurance company will cover the majority of your health care costs and you are only responsible for a "coinsurance" portion. For example, suppose your plan has 20% coinsurance, you've already paid your deductible, and you need a $10,000 surgery. You would pay a maximum of $2,000 and your insurance would pay the rest.
Out-of-pocket expenses are the amounts you will pay, in addition to your monthly premium, if you require medical care.
The maximum out-of-pocket amount is the most you'll pay for in-network healthcare, excluding monthly premiums, in one calendar year. Every time you spend money on health care (in the form of deductibles, copayments, and coinsurance), it counts towards your maximum out-of-pocket. Once you reach this amount, your insurance company will pay the full cost of any covered medical service as long as you keep paying your premium.
Let's look at an example:
Suppose you require a $100,000 heart transplant and you bought a plan with a $5,000 deductible, 20% coinsurance, and a $10,000 maximum out-of-pocket. Assume you haven't yet contributed anything toward your deductible. You would only pay $10,000 for the surgery rather than your much higher coinsurance amount. This is because you are protected by your maximum out-of-pocket amount.
In-network vs. out-of-network
Every health plan has a network of doctors and medical facilities with whom they have negotiated contracts to pay a fixed amount for a given service. In essence, insurance companies negotiate discounts with certain providers. Providers that are part of that network are called “in-network” and the remaining providers are called “out-of-network.”
If you choose to see an out-of-network doctor, an insurance company would have to pay more for the services you receive, so they discourage you from going out-of-network. HMO and EPO plans will not cover any of the costs if you see an out-of-network provider (except in certain emergency cases). PPOs require members to pay a larger co-pay or co-insurance amount when they visit an out-of-network provider, so receiving out-of-network care is more expensive.