Although health insurance covers a significant chunk of your medical bills, it won’t cover everything. In fact, there are a baffling array of costs for which patients are still responsible, like deductibles, copays, coinsurance and maximum out-of-pocket payments. It’s not uncommon to feel confused, both by the terms and the different costs associated with them.
Let us help you make sense of the jargon by defining what the terms really mean and walking through a few real-life examples of the common costs of health insurance.
Deductible. This is the amount you must pay out of your own pocket for certain health care services before your health insurance or plan will start paying. Your deductible renews each year so after you’ve paid the deductible amount for the current year, you won’t be subject to it again until the following year. Here’s an example: If your health plan has an annual $3,000 deductible and you need a medical procedure that costs $3,500, you would be responsible for paying $3,000—your deductible for the year. After that, your insurance coverage would kick in for your medical bills throughout the year.
Copay. This is shorthand for “co-payment” and it’s exactly what it sounds like—the amount you pay for your doctor visits in addition to what your health insurance pays. Copay amounts vary depending on the type of insurance you have and the service for which you’re paying. Some examples of typical co-pays you might be charged are $30 for a visit to a primary care doctor, $60 for a specialist and $20 for a prescription drug.
Coinsurance. This is the percentage of a medical bill you’re required to pay even after you have paid your yearly deductible. This is different than a co-pay, because it usually applies to specialists, not general practitioners. A common example is an 80/20 co-insurance plan. With that plan, you would pay 20 percent of the medical bill (after you’ve met your annual deductible) and your health insurance plan would pay 80%.
Maximum Out-of-Pocket. As you can see, there are quite a few costs you have to pay for medical services in any given year, even if you have health insurance. But as the name here implies, those out-of-pocket costs are capped at a certain amount. That means regardless of your deductible, co-pay and co-insurance costs, you won’t have to fork over more than that “maximum out-of-pocket” amount in any one year.
Although it can seem like you must pay a lot out of your own wallet in addition to what health insurance provides, there are actually many preventive services—like annual checkups, mammograms and colonoscopies for those over 50 —that are fully covered by most plans, regardless of whether you’ve met the yearly deductible or not. And these services generally don’t require a co-pay or co-insurance.
As you shop for the right health insurance for you and your family, it really helps to understand the financial impacts of different plans. At HealthMarkets, we simplify the shopping process and help you minimize the cost of your health care services. With access to nationally recognized insurance companies and thousands of health insurance plans nationwide—including those eligible for government subsidies—HealthMarkets can work with you to find the right plan for you and your family. Call us 24/7 at (800) 429-5058, get quotes at HealthMarkets.com or meet with one of our 3,000 local, licensed health insurance agents.