Deductibles and Co-pays

For those who is seeking out to understand how to reduce financial loss in that complicated  medical insurance system in the USA, would probably like to learn a little bit about the terms meaning.

Thanks to tlc.howstuffworks.com for the explanation.

A co-payment, or co-pay, is the flat amount you pay at the time of a medical service or to receive a medication. Each health insurance plan establishes these fees up front — they are often printed on your health insurance card. Insurance companies use these co-pays in part to share expenses with you. In addition to cutting a small portion of the costs, the co-pay is also used to prevent people from seeking care for every trivial medical condition they might encounter.

In this way, co-pays can save an insurance company a substantial amount of money. However, while the co-pay has been found to lower costs by making people think twice before running to the doctor over a case of the sniffles, they might also prevent people from seeking necessary medical attention. For example, a person with a chronic condition may need to see four doctors over the course of a month, all of which require a $25 co-pay. However, if that patient cannot afford $100 each month, he or she will most likely skip one, if not all, of those appointments. Co-pays can often total hundreds of dollars each month if you have several health ailments. In these cases, many patients begin to pick and choose which medications they deem necessary, making for a potentially dangerous situation. But most would say that the alternative — no health insurance — would be worse.

Don’t Confuse Co-Payment and Coinsurance

Coinsurance and co-payments are not the same thing. A co-payment is a specific amount that you pay at the doctor’s office before you meet your deductible. Coinsurance is a percentage of a provider’s charge that you may be required to pay after you’ve met the deductible.

When you’ve met your deductible, you’ll have to pay coinsurance (usually 20 percent of the provider’s charge) until you reach your out-of-pocket maximum. After that, the insurance company will pay for all covered services to the policy maximum for the remainder of the year.

 

 

deductible is a fixed amount of money you have to pay before most, if not all, of the policy’s benefits can be enjoyed. However, in many health insurance policies, you can use some services, like a visit to the emergency room or a routine doctor‘s visit, without meeting the deductible first. These services will vary with each type of plan.

A deductible amount is calculated yearly, so you have to meet a new deductible for each year of the policy. Before you meet this amount, you are required to pay for health care. Once you meet this deductible, however, the health insurance benefits kick in, and you’re then responsible only for paying monthly premiums and coinsurance if applicable. Deductible amounts vary by plan and can be separated into individual or family deductibles. In general, a family deductible is double an individual deductible, but it can include several members of a family.

A plan with a high deductible will have a low monthly premium, and vice versa. If you are relatively healthy, a smart rule of thumb when buying a policy is to pick a high deductible to lower your monthly premium costs. If all goes well for your health that year, you won’t spend much money on health care expenses, and your monthly premium costs will be very low.

But if something catastrophic occurs, your initial expenses will be high. This is because your entire deductible has to be met before your insurance company will cover many of the services you will likely need, including hospital stays.

A deductible is also considered an out-of-pocket expense and can help you meet your out-of-pocket expense maximum. An out-of-pocket expense maximum, or cap, is the amount you need to meet for the insurance company to pay 100 percent of your health expenses. Normally, your deductible and coinsurance can be applied toward this maximum amount. Your co-payments or monthly insurance premiums are not included in this cap.

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