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5 health care terms you should know

Are you confused about copays? Not sure what a deductible is? Don’t worry, you’re not alone. A survey by PolicyGenius revealed that only 4% of Americans know the most common health care terms.1 Yet understanding these terms is a vital part of managing your overall health. Knowing health care terms can help you figure out — and potentially plan for — your medical costs and care.

To help, we broke down 5 of the most common health care terms you’ll want to know so you can better understand your care — and have more control over managing your total health.

Note: There are different types of health plans. So, depending on your plan, some of these terms may not apply. If you have questions, contact your health care provider for details.


1. Copay

A copay is a flat fee you pay for specific services covered under your health care plan. For example, your health plan might have a $20 copay for doctor visits and a $10 copay for prescriptions. This means that when you check in for a doctor appointment, the receptionist might tell you that you owe a $20 copay for your visit. If your doctor writes you a prescription during your visit, then the pharmacy staff may ask you to pay a $10 copay to fill the prescription.

If you happen to get other, unscheduled services — like an X-ray or ultrasound — during your visit, you might get a separate bill (which depends on the type of plan you have).

Copays apply whether or not you’ve met your deductible (more on that later).

2. Coinsurance

If your plan has a coinsurance, then instead of paying for the full cost of certain health care services, you’ll only pay a percentage (your coinsurance). For example, if the full cost of a procedure is $100 and your coinsurance is 20%, then you’ll owe $20 for that procedure.

Coinsurance is often confused with copays, but they’re not the same. Your plan may have copays or coinsurance — or it may have both — that will apply to different types of services. If your plan has a copay and coinsurance, then there are some cases where you might be asked to pay both during a doctor visit. We’ll walk through an example of this scenario below.

3. Deductible

If your plan has an annual deductible, then you’ll need to pay a certain amount — like $1,000 — for covered services each year before your health care plan starts to pay. But keep in mind that once you reach your deductible, you may still need to pay coinsurance or copays for certain services (depending on the type of plan you may have). You’ll also need to meet your deductible before you reach your out-of-pocket maximum for the year.

4. Out-of-pocket maximum

An out-of-pocket maximum is the most you’ll pay for covered services each year. Once the maximum is met, your plan will then pay 100% of covered services. However, depending on your plan, you may still need to pay a copay or coinsurance for certain services after reaching your out-of-pocket maximum.

5. Health savings account (HSA)

An HSA, or health savings account, lets you and your employer put aside tax-free2 dollars to help pay for qualified health expenses. Your account can earn interest, and you can keep the money if you change jobs or retire. You need to have a qualifying deductible plan to open an HSA, but there are other types of tax-free savings accounts for medical expenses. 2 Two of the most common are:

  • Health reimbursement arrangement (HRA): An account your employer puts money in to help you pay for health care. Employers decide the specific rules for their HRAs, including what costs the accounts can cover and whether unused money rolls over year to year.
  • Flexible spending account (FSA): An account that lets you and your employer put aside money to help pay for eligible health expenses, like glasses or dental care. Most FSAs have a “use it or lose it” policy and won’t roll over any unused money at the end of the year. And your employer owns the account, so you lose any unused money if you change jobs or retire.

How health care terms work together — and can impact your costs

Now that you know the most common terms, it’s important to understand how they work together to impact health care costs. Let’s walk through the following example.

Jane Smith has a deductible HMO plan. This plan has:

  • $2,000 annual deductible
  • $20 copays (for office visits)
  • 20% coinsurance (for lab and radiology tests)
  • $3,000 out-of-pocket maximum

Jane also has an HSA account with a current balance of $20.

While playing with her kids at the park, Jane hurts her ankle. She goes to her primary care doctor to have it checked out. When she arrives at the doctor’s office, the receptionist asks her to pay a $20 copay for the visit. Jane uses her HSA account to pay using the tax-free2 money from her employer.

During the visit, Jane’s doctor believes she may have ruptured a tendon and recommends she get an MRI, which will cost $2,000. Jane will need to pay the entire cost of the MRI, but it will go towards meeting her deductible for the year.

The MRI reveals that Jane has torn her Achilles tendon and will need surgery, which will cost $5,000.

Now that Jane’s deducible has been met, her coinsurance will kick in, which means her health plan will cover 80% of the costs of covered services. Jane will only need to pay $1,000 (which is 20%) of the $5,000 cost of her surgery.

Paying for her surgery also met Jane’s $3,000 out-of-pocket maximum for the year. So, if another injury or illness were to happen again within the same year, Jane may not need to pay a copay, coinsurance, or deductible.3

Learn more health care terms

Want to learn more about common health care terms? Check out our glossary.


14 Basic Health Insurance Terms 96% of Americans Don’t Understand,” PolicyGenius, January 24, 2018.

2The tax references on this page relate to federal income tax only. Consult with your financial or tax advisor for information about state income tax laws.

3For a small number of services, you may need to keep paying copays or coinsurance after reaching your out-of-pocket maximum.

Get access to cost estimator tools

Kaiser Permanente members can also track their deductible, check their out-of-pocket maximum, and estimate their health care costs online by signing in to their account.