The insurance world can be a little confusing, especially if you are not familiar with the frequently used terminology. This blog may help you understand your insurance coverage a little better and help you be a little more prepared should you ever need to contact your insurance company to ask about coverage.
It is always very important to understand your insurance plan and what your premiums pay for. I am going to cover some very common terms that you have probably heard or read when you signed up for your policy.
A copay is a set amount that the insured (that’s you) pays for certain services. For example, you may pay a $20 copay every time you visit your primary care doctor’s office, or you pay a $50 copay every time you see a specialist. Copays do not count towards your deductible and you typically still have to pay a copay even after your deductible has been met.
A deductible is an amount that you as a policyholder must pay each year for your medical expenses before your insurance company will begin to pay their share.
For example, you have a health plan with a $1,500 deductible. After a stay at an in-network hospital, you might have a medical bill for $30,000. The insurance company is contracted with the hospital and this allows them to receive a substantial discount off the charges that are billed for your services. You would be responsible for paying the first $1,500 out of pocket. At that point, your health plan would begin to pay benefits for the remaining adjusted balance, according to the terms of your policy.
Coinsurance refers to the money that an individual is required to pay for services rendered after your deductible has been paid. Coinsurance is often specified by a percentage.
For example, the insured pays 20% towards the charges for a service, and the insurance company pays 80%. You only owe your portion – in this example 20% – of the adjusted fee that the insurance company determines. After the insured has paid the deductible, he/she is responsible for a percentage of the overall costs, which is specified by the “coinsurance split” (In this example, the coinsurance split was 80/20). Some other common coinsurance splits are 90/10 and 70/30, in which the insured pays the smaller percentage and the carrier pays the higher percentage.
That remains the case until the out-of-pocket maximum for the year is reached. At that point, the insurance company will start to pay 100% of the covered claims, until the end of the year.
OUT OF POCKET MAXIMUM (OOPM):
Your out-of-pocket maximum is a pre-determined limit of money that an individual must pay out of his/her own pocket before the insurance company will pay 100% for the insured’s health care expenses. This pre-determined limit will vary from policy to policy.
Join us next week when we discuss a few more insurance terms, specific to transgender surgery!