To the untrained, health insurance plans can be difficult to understand. Too often, they contain insurance jargon that can make you feel like your insurance policy was written in another language. However, it is important that you look over your health policy so you understand exactly what kind of coverage you have available to you. The last thing you want is to have a medical problem develop and find out that your health plan does not cover the bills. Two frequently misunderstood parts of the health plan is the deductible and the coinsurance. This article will take a look at both.
A deductible is the amount of money that you have to pay out of pocket before the health insurance benefits kick in. Generally, this is a yearly amount that must be paid. So, when your insurance renews so does your obligation to pay the deductible. Depending on the insurance policy, the deductible can be assigned on a per person basis (i.e. $1,000 per person) or can be a single deductible for the whole family (i.e. $2500 for the family). Not all medical services you use and pay for will be applied to the deductible and some services, such as doctor’s visits, may be paid by a set amount, called a copay, regardless if the deductible has been met. Claims that count towards the deductible usually will come from inpatient or outpatient visits, surgeries, and emergency room visits.
Once the annual deductible has been satisfied, coinsurance is the amount of the medical claim that the patient is responsible for paying. This is generally expressed in percentages. For example, once the deductible has been satisfied, the insurance may pay for 80% of a surgery while you are responsible for the other 20%. Do not confuse this with a co-payment. A co-payment is the set amount you pay for minor services like a visit to the doctor. The most common coinsurance split is the 80/20 and many insurance plans have an element of coinsurance built in. For example, after you pay your deductible, you may be required to pay 20% of all services with the health insurance company picking up the rest. Make sure your policy has a maximum coinsurance amount that you are responsible for – this is usually $2000 or $3000 per person with a maximum of two persons in the family. This limits your total out of pocket exposure.
Two factors that you need to be aware of on your health insurance policy is your deductible and coinsurance. Not understanding how much money you will be responsible for when you have a medical problem will definitely result in a sticker shock when you get the bill in the mail. Save yourself some aggravation by checking your health policy before there is a problem. If you feel your insurance is inadequate, then work with a health insurance agent to purchase insurance that fits your unique health situation.