Changes in health insurance laws over the years have given many people more say in which insurance policies they carry. But while it is nice to have a choice in the matter, the world of shopping for health insurance can also be a little confusing. In order to effectively compare policies and choose the best one for you, there are a few terms you really need to understand.

Deductible

With most insurances, the deductible is the amount you pay when making any claim before the insurance kicks in and starts paying. The term is interpreted a bit differently in health insurance. Here, the deductible is the amount you'll pay each year for health insurance before your insurance kicks in. For example, if your insurance policy has a deductible of $1000, you will pay out-of-pocket for any procedures you need until you've paid $1,000. Then, your insurance will pay for any additional procedures you need — minus copays, as discussed below.

Copay

A copay is the amount you will personally pay when you need health care. Copays are usually reasonably low. You may have a copay of $20 for a well visit or $50 for a hospital stay, for example. Make sure you compare copays when shopping for health insurance. One policy may be cheaper, but have a higher copay — meaning you won't save as much as you might think if you make a lot of visits.

Out-of-Pocket Maximum

The out-of-pocket maximum is the maximum you can pay per year including copays, payments you make before reaching the deductible, and so forth. After you reach this amount, the insurance policy will cover absolutely everything. Having a policy with a good out-of-pocket maximum will be really important if you ever become seriously ill. Knowing that the most you will have to come up with is, say $10,000 if you come down with cancer or are in a terrible accident can be reassuring.

Out-of-Network Coverage

Insurance companies each have a network of providers who they work with. Some insurance policies also offer coverage, but to a lesser degree, if you visit a provider who is not a part of their network. Having some degree of out-of-network coverage is really important if you travel. It's less important if you never really leave town and most providers are in the insurance company's network anyways.

Now that you better understand these terms, you should have an easier time finding an insurance policy that really works for you.

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