A premium is the amount you pay to the health insurance company or the State of Vermont each month for health insurance. You pay the premium even if you don’t need to use health care services each month.

Cost-sharing (also called out-of-pocket spending) is the amount you pay when you get health care services — like going to the doctor or hospital. Cost-sharing includes copays, coinsurance and deductibles. These terms are explained below. Cost-sharing does not include your monthly insurance premium.

Cost-sharing is different for each insurance plan and is often hard to understand.

If you buy your insurance through Vermont Health Connect (the “exchange”), you can see the cost-sharing amounts of each plan before you buy insurance. You can compare the premiums and cost-sharing for different plans. If you get insurance through a job, you can find cost-sharing information on a form called Summary of Benefits and Coverage.

Many health insurance plans have more than one kind of cost-sharing. For example, your plan might have a deductible and coinsurance. Or you might have copays for doctor visits and coinsurance for hospital visits.

The deductible is the amount you pay each year for the health care services you use before your insurance starts paying.

If your deductible is $2,000, you will pay for the first $2,000 in health care services you get each year. Once you have paid $2,000, your insurance company will start paying its share. Your monthly premium payments do not count towards your deductible. Only covered services from in-network providers count towards your deductible.

Some plans will pay for services before you reach your deductible. This can include preventive services, prescription drugs or doctor visits. Vermont Health Connect and some other plans are required to cover preventive services for free. Click here for a list of preventive services that should be covered for free.

A copay is a set dollar amount that you pay for a covered health care service from an in-network provider. For example, you might pay $30 for a doctor’s visit or $20 for a prescription. The insurance company pays for the rest once you have met your deductible — if you have one.

Your copay for a service does not change based on the cost of that service. For example, if your copay for a blood test is $25, it doesn’t matter if test costs $50 or $1,000 — either way, you will pay $25. Your insurance company will pay the rest.

Coinsurance is a percentage of the cost of a covered health care service from an in-network provider.

The amount of coinsurance that you pay does change based on the cost of the service. For example, if your coinsurance for a blood test is 10%, and the test costs $50, you will pay $5. Your insurance company will pay the other $45 (90%). If the test costs $1,000, you will pay $100 (10%) and your insurance company will pay $900 (90%). The insurance company will only pay its part after you have met your deductible, if you have one.

Your maximum out-of-pocket is the total amount that you could have to pay for health care services in a year. The maximum out-of-pocket only counts covered health care services you get from an in-network provider. Your deductible, copays, and coinsurance all count toward your maximum out-of-pocket. The following costs do not count toward your maximum out-of-pocket:

• your monthly premiums
• services from a provider that is out of your network (unless it is for emergency care)
• spending for health care services that are not covered

Once you reach your maximum out-of-pocket, your insurance company will pay for all of your medical costs for the remainder of the year. Most people do not pay enough cost-sharing in a year to reach the out-of-pocket limit, but it can happen if you need a lot of expensive care.