Everything You Need to Know About Deductibles, Copay, And Co-Insurance

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If you’re shopping online for the best health insurance policy; then you’ll probably be comparing health insurance agencies, costs, coverage, and more. With so much to consider, health insurance can seem a little confusing. 

In this post, we’ll explain some of the key terms you’ll be faced with, and help you work out how out-of-pocket health insurance costs actually work.

Quick References

  • Out of Pocket Health Insurance Costs Explained
  • Health Insurance Deductibles Explained
  • Choosing the Right Health Insurance Deductible
  • Are monthly payments counted towards deductible fee?
  • What about ACA and deductibles?
  • Health Insurance Copays Explained
  • Are copays counted towards an insurance deductible?
  • Will you always need to pay a copay element for healthcare services?
  • Healthcare Coinsurance Explained
  • Comparing Co-Insurance Costs
  • What is an Out-of-pocket Maximum?
  • Is there a limit on Out of Pocket Maximums?

Out-of-Pocket Health Insurance Costs Explained

Almost all medical insurance plans will include out of pocket expenses. The most common of which are: Co-Insurance, Copays, and Deductibles. Each one of these will impact the total cost you can expect to pay for your healthcare. This is why it is so important to understand what they are, so you can choose the best health insurance policy for your individual circumstances.

In the following sections, we’ll go into more detail about each one; but for now, here’s a quick summary of what deductibles, copay, and co-insurance mean.

  • Insurance Deductible: A set amount that you need to pay for prescriptions and medical services prior to your co-insurance kicking in. 
  • Co-insurance: The percent of costs that you will have to pay for a covered healthcare service once you have paid your deductible. 
  • Copay: A set amount that you will need to pay for doctor’s appointments, prescriptions, and other types of medical care.

Health Insurance Deductibles Explained

An Insurance Deductible is a set amount that you need to pay for prescriptions and medical services prior to your co-insurance kicking in. 

Here’s a practical example of how a health insurance deductible works.

If your insurance deductible is $2000, you will need to pay 100% of any eligible health care expenses until the total amount you have paid reaches $2000. After you hit this threshold, you share the cost of your medical expenses with your plan by paying coinsurance.

Choosing the Right Health Insurance Deductible 

If you’re comparing health insurance coverage online, you might choose to pay an increased deductible in order to get lower monthly premiums. If you would only normally use your healthcare minimally, then you might choose a higher deductible to save money on your overall premium. However, for people who regularly need to use their healthcare coverage or those who are planning to start a family, paying higher premiums and a lower deductible could present a more appealing option. 

Are monthly payments counted towards my deductible fee?

Whatever payments you make as part of your monthly premium, these will not usually count towards your total deductible figure.

What about ACA and deductibles?

Any major medical insurance plans that are ACA-qualified will include a number of preventative care options, such as mammograms, immunizations, screenings, and annual physicals. This means that those services will not usually be subject to your health insurance deductible. You are generally 100% covered for them, even before reaching your deductible amount. There might still be out of pocket expenses to consider, such as copay. 

Health Insurance Copays Explained

Copay is a set amount that you will need to pay for doctor’s appointments, prescriptions, and other types of medical care.

Also referred to as co-payment, this is the set amount you will pay when you receive medical care. The amount you will be expected to contribute for each copay should be detailed on your health insurance ID card, and it is different depending on the type of service you need to access. 

Are copays counted towards an insurance deductible? 

In most cases, your insurance plan will not count co-payments towards your deductible. However, there are some which are the exception to this rule, so it’s always worth checking. 

If you haven’t met your deductible, then you could end up becoming liable for a portion of your healthcare costs once the medical provider bills your insurance company. Even if you have met your deductible, you will still probably be liable for some out-of-pocket expenses which fall into the co-insurance category. 

Will you always need to pay a copay element for healthcare services?

Not all health insurance plans use copays to share the cost of any eligible expenses. There are also some services that could be covered with no applicable out-of-pocket expenses to you, such as specific types of preventative care services and yearly check-ups.

Healthcare Coinsurance Explained

Co-insurance is the percent of costs that you will have to pay for a covered healthcare service once you have paid your deductible. 

A co-insurance payment is usually requested once you have hit your yearly deductible. You will then need to continue to pay your coinsurance costs until you hit your maximum out-of-pocket amount. Once you hit this number, your health insurance company should pay 100% of the costs of any covered services. 

Your co-insurance rate will impact your total out-of-pocket costs if you need to utilize your policy benefits. 

Comparing Co-Insurance Costs

If you are trying to compare health insurance policies, then you will typically see your co-insurance costs presented as a percentage, such as 70/30. The first number you see (70), will be the portion of the bill that will be covered by your insurer. The second number (30) is the percent that you will be expected to pay. 

What is an Out-of-pocket Maximum?

This is the maximum amount of money you will need to pay annually towards the cost of any covered services.

Although it speaks for itself, the out-of-pocket maximum limit refers to the maximum amount of money you could have to pay towards your own medical expenses. This includes copay, co-insurance and deductible payments, but it will not include your monthly premiums.

If you need medical care which isn’t covered under your health insurance plan, you will need to pay the total amount for the treatment, and it will not be counted towards your out-of-pocket expenses. 

Is there a limit on Out-of-Pocket Maximums?

The ACA did set a limit, which for 2019 is $15,800 for a family and $7900 for an individual. With this said, there are many health insurance plans that have lower maximum out-of-pocket limits than this.

Deductibles, Copay, And Co-Insurance Summarized

While you might consider a slightly lower monthly premium to be the most attractive option, you need to weigh the different scenarios that may occur. Most people like to know they have their full deductible payment covered, just in case of a medical emergency. However, the best type of healthcare coverage needs to be tailored to your individual or family circumstances.

Never rush into buying healthcare coverage. Take your time, do your research, and compare health insurance agencies online first. 

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