Individual health insurance is coverage you buy directly from a health insurance company, while group insurance is coverage you receive through your employer.

Individual insurance is not just for individuals, however. You can purchase an individual health insurance plan to cover you and your family, too.

Deductibles, coinsurance, copays, out of pocket, oh my!

We’ve all heard of these terms, but how do they work together and what do they mean for you?

First, it’s important to know that all of these terms are really just one thing: cost sharing. Cost sharing is all of the ways you and your insurance company share the costs of your health care.

Ready to learn how premiums and deductibles work together? Let’s go!

Learn what they mean and how they work together

Your premium is tied to your covered benefits, cost sharing and deductible. A deductible is the amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay.

For instance, if you choose a high-deductible plan, you’ll most likely have a lower premium, and vice versa. In short, premium and deductible options give you the power to select the right mix for you and your finances.

Learn how it fits in with premiums and deductibles

We’ve already talked about premiums and deductibles, so let’s talk about coinsurance. Coinsurance is your share of the costs of a covered health care service, calculated as a percent of the allowed amount for the services. You pay coinsurance plus any deductibles you owe. For instance, say you’ve already paid out (or met) your $1,500 deductible, and your coinsurance is 20 percent. For a $100 health care bill, you would pay $20, and your insurance company would pay $80.

What does this mean for me?

When you’re choosing a plan, you don’t want to look at just premiums and deductibles. Take a look at the coinsurance amount, too, and then decide which deductible, premium and coinsurance mix is the best option for you and your finances.

Discover how fixed fees affect your health care costs

A copay is a fixed amount 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. A doctor’s office visit might have a lower copay such as $30, and an emergency room visit might have a higher copay of $150, for instance.

What does this mean for me?

When you go to the doctor, keep your copay in mind. You’ll want to pay it before you leave the doctor’s office. If you visit your doctor often, you might want to choose a plan that has low copays. For instance, you might choose a plan that has a higher monthly premium but covers doctor’s office visits altogether with no or low copay. If you don’t visit the doctor often, copays will probably be less of a concern when you’re shopping for coverage.

Moving on to out-of-pocket maximums

An out-of-pocket maximum is the most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100 percent of the allowed amount. This limit never includes your premium, balance-billed charges or health care your health insurance or plan doesn’t cover. Some health insurance or plans don’t count all of your copays, deductibles, coinsurance payments, out-of-network payments or other expenses toward this limit. However, if the plan is health savings account-qualified, copays count toward the out-of-pocket maximum. (See: “What is an HSA and how does it relate to health insurance?”)

What does this mean for me?

When you look at out-of-pocket maximums, make sure your health care budget allows that maximum amount you’d need plus your copays and premium for one year. If it’s too high, you can choose a plan with a different mix of deductible and coinsurance that might have a different out-of-pocket maximum or premium. Now that you have a firm handle on cost sharing, let’s talk about another big factor: Your network matters. (See: “Your network matters”)

A health savings account, or HSA, allows you to save money for your health care needs while maximizing tax savings by making tax-free contributions to your HSA.

You can use funds in your account to pay for current medical expenses or save for future health care needs. The current maximum contribution allowed is $3,050 for individuals and $6,150 for family coverage. These dollar amounts are adjusted annually by the federal government. Money not used by the end of the calendar year rolls over to the next year and can earn interest.

Not all insurance plans are HSA-compatible.

Learn why staying in network keeps your costs low

We already talked about cost sharing, but network is equally important to maximizing your coverage and your health care dollars. Why? Well, it all depends on the doctors and hospitals you visit and how they fit into your benefits.

Let’s start by defining the term network

A network is formed when health insurance companies arrange contracts with a group of health care providers or doctors to negotiate the lowest health care costs for you and the insurance company, too.

What does this mean for me?

When our members stay in network, they get quality care at lower prices. However, if our members go out of network, health care costs can become a lot more expensive. To get the most out of your health insurance plan, make sure your doctor is in network. When you choose one of our plans, you can worry less because Blue Cross Blue Shield has the largest network in Michigan.

A preferred provider organization, or PPO, is a limited group of health care providers who have agreed to provide services to members enrolled in a PPO program. These providers accept the approved amount as payment in full for covered services.

A health maintenance organization, or HMO, is a type of managed care organization that is composed of physicians, hospitals or other providers who have agreed to treat patients in accordance with the HMO’s guidelines. Most HMOs require members to select a primary care physician, and that PCP provides referrals to specialists or other doctors except for medical emergencies.