Are you confused by some of the terminology associated with your health insurance policy? If so, you are certainly not alone. Thousands of people each year incur additional medical costs because they failed to read the fine print in their health insurance policy. To help you understand some of the more commonly used language in health insurance, we have put together the following article highlighting some of these terms, along with a brief definition for each.

Understanding Health Insurance Terminology

The premise of health insurance is not that difficult to understand: you pay a monthly or annual fee in exchange for protection against the costs associated with illness or injury. The terminology associated with health insurance, however-terminology which is usually located somewhere in the fine print-can be a bit puzzling. Below are some of those terms with a short definition of each:

• Premium. The premium represents the amount paid by you, your employer, or both to the company issuing the policy. Typically this is a fee paid monthly. The dollar amount of your premium is based on a number of different factors including, but not limited to, your age, type of policy, your general health and your deductible.

• Deductible. Quite simply, the deductible is the amount of money which must be paid by the policy holder before the insurance kicks in. For example, if the deductible on your policy is $250 a year, the first $250 dollars of medical costs you incur will be your responsibility.

• Co-Payment. Unlike the amount of the deductible which needs to be met only once a year, a co-payment will need to be paid each time you receive medical services before the insurance begins to pay. For example, is your co-payment is $20, this is the amount you will need to pay up front each time you see a doctor or other medical professional.

• Exclusions. Exclusions are very important and you should always be aware that they exist. These are services which are not covered under your insurance policy and are therefore your responsibility. For example, if radiology treatment is excluded in your particular policy, any time you have an x-ray it will be your responsibility to cover the costs.

• Coverage Limits. This is another one that can come back and "bite" you if you're not careful. Some medical services are only covered to a certain limit, and once that limit has been reached it will be your responsibility to pay the balance.

These are just a few of the terms used in the health insurance business, and as the insured, it is your responsibility to understand each of them completely. Failing to do so can be a very costly mistake.