Health insurance protects you from financial ruin should you have a serious health issue and makes it more likely you’ll seek treatment when you’re ill.
To get the most from your coverage, you should understand certain financial insurance terms and how they affect your coverage. The more you understand what bills you are responsible for, the better you can avoid financial difficulties if you need medical treatment.
Each time you see a doctor or buy a prescription, you’re asked for a fixed sum payment. That’s your copay. Check your insurance card — the amount you have to pay should be listed on the card.
You may not have to pay a copay if your health insurance plan pays for an annual check-up and preventive care services.
When choosing a health insurance plan, varying levels of deductible are often available.
A deductible is the amount you pay out-of-pocket each year for certain medical services or medicines. After you reach the deductible, the insurance company will pay the majority of your eligible bills. For example, if you have a $3,000 annual deductible, you must pay the first $3,000 of your total eligible medical costs before the insurance company starts to cover more or all of the costs of your medical bills.
There’s also a deductible for family coverage. Once one or more of your family members meet the family deductible, then an insurance company will start paying the expenses for all family members, even if one or more family members haven’t met the individual deductible.
Not every medical service or procedure qualifies. Check your insurance policy, but eligible medical services that usually count toward your deductible include bills for hospitalization, surgery, lab tests, MRIs, CAT scans, anesthesia, physical therapy, medical devices, mental health care, and chiropractic care. Copays and premiums usually don’t count toward your deductible.
Deductibles range from $0 to thousands of dollars. Usually, the higher the deductible your plan has, the lower the premium you pay. While it might be tempting to go with the higher deductible to save money on your monthly premium, you must also consider how much medical care you or your family might need during the year. For instance, if you know you will have a medical procedure that should be done soon, it would be more cost effective to pay for the lower deductible.
Coinsurance is the portion of medical costs you and your insurance company will share once you meet your deductible. The amount is usually represented by a percentage. Typical percentages are 100%, 90/10, 80/20 and 50/50. For example, if you met your deductible and later had a $2,000 medical procedure, with an 80/20 coinsurance insurance plan, you will pay $400 and your insurance company will pay $1,600.
If your medical expenses are high, there may come a time when you don’t have to pay copays and coinsurance. You only pay medical expenses until you meet your out-of-pocket maximum. An out-of-pocket maximum is the most you must pay for covered medical expenses during a policy period. This amount includes the money you spend on deductibles, copays and coinsurance. Once you reach your annual out-of-pocket maximum, your insurance will pay 100 percent of your covered medical and prescription costs for the rest of the plan year. You still will pay your premiums until the end of the plan year.
Insurance language can be hard to decipher sometimes. If you have questions about insurance terminology, don’t hesitate to contact your USI Northeast representative.