Health Insurance basics
Health Insurance Basics: What You Need to Know
Health insurance can feel confusing, especially when you’re trying to focus on your recovery and care. Understanding a few key insurance terms can help you feel more confident about your benefits, costs, and treatment decisions. Below is a simple breakdown of the most common concepts we’re asked about in our clinic.
Deductible: What You Pay First
Your deductible is the amount of money you are responsible for paying out of pocket each year before your insurance starts contributing to covered services.
Deductibles typically reset at the beginning of the calendar year
Until your deductible is met, you may be responsible for the full allowed amount (explained below)
Some plans have separate deductibles for in-network and out-of-network care
Example:
If your deductible is $2,000 and you’ve paid $500 so far this year, you still have $1,500 remaining before insurance begins sharing costs.
Out-of-Pocket Maximum: Your Financial Safety Net
Your out-of-pocket maximum is the most you’ll pay in a year for covered healthcare services.
Once this amount is reached, insurance covers 100% of covered services for the rest of the year
Deductibles, co-pays, and co-insurance usually count toward this maximum
Like deductibles, out-of-pocket maximums typically reset annually
This protects you from unlimited medical expenses in a single year.
Co-Pay: A Set Fee Per Visit
A co-pay is a fixed dollar amount you pay for a service, such as a physical therapy visit.
Common co-pays might be $20, $30, or $50 per visit
Some plans require a co-pay only after the deductible is met
Other plans require a co-pay from the first visit
Your insurance plan determines when and how co-pays apply.
Co-Insurance: A Percentage Split
Co-insurance is the percentage of costs you share with your insurance after your deductible is met.
Example:
If your plan has 20% co-insurance and the allowed amount is $100, you pay $20 and insurance pays $80.
Co-insurance continues until you reach your out-of-pocket maximum.
Allowed Amount: The Key Number That Matters
The allowed amount is the maximum fee your insurance company considers reasonable for a service.
This is often less than the provider’s standard charge
Your cost (deductible, co-pay, or co-insurance) is based on the allowed amount, not the billed amount
For in-network providers, the allowed amount is pre-negotiated with insurance
Understanding the allowed amount helps explain why charges and patient responsibility may differ.
In-Network vs. Out-of-Network: What’s the Difference?
In-network providers have contracts with your insurance company that set agreed-upon rates.
Out-of-network providers do not have these contracts.
While in-network care is often less expensive, out-of-network care is not always significantly more expensive. The difference depends entirely on your individual insurance plan.
Important things to know:
Some plans offer excellent out-of-network benefits
Deductibles and co-insurance may be higher out-of-network, but not always
The allowed amount still applies, even out-of-network
Quality of care, provider expertise, and personalized treatment can be important factors to consider
We encourage patients not to assume that out-of-network automatically means unaffordable. Many patients are surprised to find their costs are similar—or manageable—depending on their plan.
Want Help Understanding Your Benefits?
Insurance plans vary widely, and no two plans are exactly the same. If you’d like help understanding your benefits before scheduling, or if you have questions about your current plan, our team is happy to help guide you.
Understanding your insurance empowers you to focus on what matters most—your recovery. At Kauno we provide detailed good faith estimates to make sure you have a full understanding of your coverage prior to treatment.
