Many people struggle to understand insurance terms, so we have created this blog post to help improve understanding of common health insurance terms. We have selected a few common terms and explained what they mean for you, the healthcare consumer.
Deductible: The amount of expenses that must be paid by the insured person (or their legal guardian) before an insurer will pay any expenses.
Example: If your deductible is $500 and you have met $200 of that deductible, you will have to pay $300 to meet the full deductible before your insurance company will begin to cover any of your health care costs.
Co-insurance: This is a percentage (assigned by the insurance company) that the insured person pays after the insurance policy’s deductible is met. Once your deductible has been met, your insurance company may hold you responsible for a portion of the cost of your health care. The insured person pays this percentage until they meet their max out-of-pocket amount.
Example: If you have an insurance plan with a co-insurance of 80/20, this means the insurance company will cover 80% of approved charges and you (the patient) will be responsible for 20% of the approved charges.
Max Out of Pocket: This is the maximum out-of-pocket amount the insured will pay. Once the insured person’s out-of-pocket expenses equal the “maximum,” the insurance company will typically assume responsibility for 100% of any additional costs.
Example: If you have a $1000 deductible and a $1500 max out of pocket, then you only have to spend $500 more after you met your deductible to meet your max out of pocket. From that point on, your insurance company will cover most charges at 100%. Please note that co-pays may still be due after meeting your max out of pocket. Read on to learn more about co-pays.
Co-Pay: A payment (usually a fixed amount) defined in the insurance policy and paid by the insured person each time a medical service is accessed.
Example: Most insurance cards include co-pay amounts on the card. These vary based on your plan. These co-pay amounts are also different for providers who are considered “specialists” such as physical therapists, neuro surgeons, etc… Also worth noting is that co-pays may not count towards you deductible or max out of pocket amounts and that you may still owe a co-pay even after you have met your max out of pocket amount for the year.
We hope this quick reference guide was helpful to you. If not, please click on the following links for more info or call our office for more information. http://www.bls.gov/ncs/ebs/sp/healthterms.pdf
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