How Health Insurance Coverage Works

Getting the right health insurance policy that suits your needs can go a long way in reducing your out-of-pocket medical costs. At the same time, with an array of complicated terms and conditions, it can be confusing to select a policy.

Here is a breakdown of commonly used health insurance terms to help you better understand how to select a health insurance policy that works for you.


Co-insurance is a percentage of the total amount of medical costs that are covered by your policy after accounting for the payment made by you in the form of the deductible amount. Usually, most policies involve an 80/20 split, with the insurance company paying 80% of the costs after the deductible amount.

Coordination Of Benefits

This occurs when multiple sources of health insurance benefits are available to a person from different sources including their employer’s or partner’s policy. It involves using a secondary policy to cover the amount exceeding the primary policy’s total coverage such as in the case where the yearly limit is exceeded or other scenarios.


Co-payments are a fixed amount that you are liable to pay out of pocket every time you receive certain types of medical services, for example, doctor’s visits or upon purchasing prescription medicines. It is usually set at a modest amount.


Deductibles are a fixed amount of money, for the duration of the policy term, that you are required to pay before your health insurance policy starts covering your costs. They tend to vary depending on the type of medical services being used and whether for individual and family coverage. They also have a big impact on premiums, with higher deductibles usually having lower premiums and vice versa.

Dual Coverage

Dual coverage involves coverage under two health insurance plans. It can include additional coverage under extended health or supplemental health insurance policies. Usually, you can only be the primary enrollee for one plan. This is especially important when determining the coverage via coordination of benefits, with the primary carrier having the primary obligation of covering the costs. Dual coverage can be advantageous in some scenarios.

Out-of-Pocket Maximums

Out-of-pocket maximums is a term  used to denote the maximum amount that you are liable to pay after accounting for the co-payments, coinsurance, and deductibles. Beyond this point, your health insurance company is liable to pay for all of your medical costs.