Deductibles… copays… coinsurance…
All the important aspects to health insurance can make your head spin. Perhaps you received an unexpected bill for something, or maybe you think you need a particular test or service but you’re not sure if you’ll incur any out-of-pocket costs. We’ll walk you through some key points that will help you manage your health insurance expenses.
What is a deductible? A deductible is the amount you pay for health care services before your insurance kicks in. Just like your homeowners or automotive insurance, you might have a set out-of-pocket fee, and if your cost exceeds that amount, your plan will cover the remainder or a percentage of the remainder.
For example, if you have a plan with a $2,500 deductible, you would be responsible for paying for your own health care expenses up to that amount. If you require hospitalization that costs $3,000, you would pay the $2,500 deductible, and the plan would pay for a percentage of the remaining $500.
What is coinsurance? Coinsurance is the amount you pay for a health care service. If you’re responsible for 20 percent of a bill for $150, then your coinsurance is $30. If your health plan has a deductible, the coinsurance is the amount you’re responsible for after your deductible is met.
What is a copay? A copay is a set amount that you pay for a health care service at the time the service is rendered. The copay amount depends on your plan and on the nature of the service. Prescription medications also require copays, and they will vary depending on the medication and formulary.
Why are these terms important for me to know?
Premiums and deductibles aren’t the only considerations when choosing a health insurance plan. Most plans involve a combination of deductible, premium, and coinsurance, so you have to determine your ideal ratio. If you require frequent doctor visits, a plan with low copays might be the best option, even if it has a higher monthly premium. If you don’t typically visit the doctor often, but you want to be prepared for the unexpected, a high-deductible plan with a lower annual premium might be a good option – just be sure that you are prepared to cover the cost of the deductible.
Of course, no one can predict exactly what his or her health care needs will be during the course of a year. It’s almost inevitable that some illness or condition will cause you or a family member to require some kind of medical attention, though. That’s why choosing the most affordable coverage, with the best quality medical care, is so important.
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