Understanding Insurance, sort of...
- wavecrest
- May 13
- 4 min read

This is the everyone's least favorite part of therapy- dealing with insurance. So I wrote it all out and hopefully this will make some sense!
Because this write up is long and boring- you might prefer to check out the video linked here (it's still boring though):
Before diving in - please note that all insurance plans are different, and the information provided here is intended to be a helpful guide. For specific details about your insurance coverage, please refer to your policy documents or contact your insurance provider directly.
So here’s a summary of how health insurance works:
Every month, you pay your premium just to keep your insurance active.
When you use health services, you’ll either pay the full cost or a copay (a fixed fee). Paying either full cost or a copay just depends on your insurance plan.
As you keep paying for services, those costs get added up and eventually you meet your deductible. Now finally, your insurance starts helping out (lol)—this is where coinsurance kicks in, meaning the cost is now shared between you and the insurance company. This is shown as a percentage most often.
So you keep getting healthcare until at last you've spent enough on healthcare this year, and you hit your MOOP (Maximum Out-of-Pocket). Once that happens, you typically don’t have to pay anything else for covered services until December 31.
And as all good things must come to an end, everything resets on January 1.
PREMIUM
A premium is the amount of money paid to your insurance company for coverage on a monthly basis. If you have an employer sponsored plan, it is usually taken from your paycheck to pay for having insurance. If you bought your insurance directly through the marketplace, you may need to log you’re your insurance company’s website to pay the bill for your premium. You may also have the option to set up an automatic payment so the amount for you premium will be charged to the bank account on file.
If you do not pay a premium like with Medicaid it is because the government is paying your premium for you. Every insurance plan has a premium.
DEDUCTIBLE
A deductible is the amount you pay out-of-pocket for healthcare services before your insurance starts to pay. For example, if your deductible is $2,500, you'll pay 100% of the first $2,500 of your healthcare costs yourself. After that, your insurance plan starts to share the costs.
COINSURANCE
Coinsurance is the cost-sharing between you and your insurance company for covered services after you’ve met your deductible. It’s usually shown as a percentage. For example, if your coinsurance is 20%, you'll pay 20% of the medical expenses after meeting your deductible, and your insurance will pay the other 80% until you reach your out-of-pocket maximum for the year.
COPAY
A copay, or copayment, is a fixed amount you pay for healthcare services at the time of care. For example, you might have a $50 copay for each visit to your primary care doctor and a $55 copay for each urgent care visit. Depending on your plan your copay may be higher or lower for therapy. Usually, you will pay your copay for every session -until your maximum out-of-pocket are met.
"MAXIMUM OUT-OF-POCKET“ aka “MOOP” aka “out-of-pocket maximum”
The maximum out-of-pocket costs are the total amount you pay for covered services in a plan year before your insurance pays 100% for those services. This usually includes your payments towards deductibles copays, and coinsurance. For example, if your out-of-pocket maximum is $3,000, once you’ve paid that amount in deductibles, copays, and coinsurance, your insurance will cover all additional costs for the rest of the calendar year, until December 31.
Bonus Questions
What is the difference between a deductible and out-of-pocket maximum?
A deductible is what you pay for healthcare before your insurance starts to pay. An out-of-pocket maximum is the most you have to spend on covered healthcare costs (including deductibles, copays, and coinsurance) in a year before your insurance pays everything.
What does in-network mean?
An in-network provider is a hospital, doctor, or other medical service provider that has a contract with your insurance plan. Using in-network providers usually costs you less than using out-of-network providers, who don't have a contract with your insurance plan.
This is why asking if a provider takes insurance is not enough. It is important to make sure that your provider takes YOUR insurance.
For example: At Wavecrest we don’t have a contract with Sentara/ Optima, so even though we work with other insurances as “in-network,” we would be “out of network” for someone that has Sentara/Optima insurance.
What is an EOB or Explanation of Benefits?
An EOB, or Explanation of Benefits, is a document from your insurance company that explains what medical services were paid for on your behalf, how much the insurance paid, and how much you owe. It also shows how much of your deductible you’ve paid and any copayments or coinsurance amounts.
Have you ever seen the movie Ferris Bueller's Day Off and gotten all the way through to the end, after the credits?
You're still here? It's over. Go home. Go.
Take care,
Emily
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