One of the things that confuse many people when it comes to health insurance is what their responsibility is in terms of payment. With there being coinsurance, deductibles, and max out-of-pocket expenses, you will need to understand what all three expenses are and how they relate to your plan.
Deductible
Imagine a situation where you have to go to the hospital for something serious, which has a medical bill of approximately $10,000. The first thing that you are going to be responsible for paying towards the medical bill for your injury or illness is your deductible. If you were to have a $2,000 deductible, that will be your first responsibility from the $10,000 medical bill. Think of your deductible as what you have to pay before you have to start paying for co-insurance.
Your deductible also resets for each coverage year. If you have a coverage year that starts January 1st and covers you for the entire calendar year, you would only be responsible for paying that $2,000 deductible for the entire year, not per medical bill.
Co-Insurance
Co-insurance is how you pay for the remainder of your medical bills after your deductible has been met. This is usually described in percentages, with how much the insurance company pays and how much you pay. For example, you may have 75/25 co-insurance, which means the insurance company pays for 75% of the cost and you pay for 25%.
Using the earlier hospital example of a hypothetical $10,000 bill, you would subtract that $2,000 deductible to leave $8,000 that would be paid with co-insurance. You would then be responsible for 25% of the remaining $8,000, which is $2,000. Your insurance provider would be responsible for the other $6,000. That brings your total out-of-pocket expenses up to $4,000 ($2,000 for the deductible plus the $2,000 for the co-insurance).
Maximum Out-Of-Pocket
The maximum out-of-pocket cost seems very self-explanatory since it is the maximum amount that you are required to pay out-of-pocket during your coverage year. If you had a maximum out-of-pocket cost of $5,000 in the example above, this would leave you with a remainder of $1,000 of maximum out-of-pocket costs for the rest of the year.
Imagine you end up getting into another accident again later in the year. Rather than pay another $4,000 for that medical bill, you would only pay the remaining $1,000 left from your maximum out-of-pocket costs.
Still feeling confused about your health insurance? Reach out to a health insurance provider for more information about how their plans work. When in doubt, reach out to your insurance provider and they can help explain things further.
Share25 April 2022
After we had our first baby, we realized how important medical insurance was. We were strapped for cash as it was, and we were left dealing with thousands of dollars worth of medical bills because of our lack of proper insurance. After paying everything off, we started shopping around for a better medical insurance plan. It took a lot of work, but after we found a plan with a lower deductible and better coverage, we knew that we would be able to save some serious money. This blog is dedicated to helping people find a better medical insurance plan, so that you can save money and stress less.
