With the ever changing and increasingly complex world of the medical industry and insurance coverage often times patients are left wondering how much is medical care going to cost them. This blog is intended to help the average person get a very basic understanding of how their insurance plan works, and better understand the terms premium, deductible, out-of-pocket max, co-pay and coinsurance that are frequently used in an insurance company’s explanation of benefits (EOB).
So let’s get started…..
Premium: The insurance premium is the monthly amount you pay for your plan. Often times if you are working and have insurance through your employer, the employer will cover the majority of your premium. The remainder of the premium is taken out of your pay check each pay period, and the nice thing is, that this deduction is taken out pre-tax. There is a wide price range of how much this costs each person and it depends on several variables, for example a single plan is usually less money than a family plan with multiple individuals/dependents. Larger companies with more employees have more negotiating power with the insurance companies which usually translates to a smaller amount deducted from your check.
Deductible: The deductible is the amount you have to cover/pay before the insurance company starts paying a portion of the charges. IF you have an extremely good plan you may only have a $300-500 deductible, but now a days most likely it is several thousand. So if you have a $3,000 deductible this is the amount you will have to pay for care before your insurance provides any significant amount of assistance/coverage.
Co-Pay: The co-pay is a fixed amount which is due at the time of service for office visits, specialty doctors such as physical therapists or prescriptions. The co-pay amount can vary by the type of service. Depending on your plan the co-pay might count toward your deductible and/or out-of-pocket max. It is usually in effect until you have reached your out-of-pocket max.
Co-Insurance: Co-insurance is the amount that the insurance company pays when you have met your deductible, but not yet reached your out-of-pocket max (if you have one). If your co-insurance is 90%, the insurance company will cover 90% of the costs and you will cover 10%; if you have a $100 charge/bill you would be responsible for $10.
Out-of-Pocket Maximum: As the name implies this is the maximum amount you are required to pay for health care in a policy period (usually one year). For example you have a $3,000 deductible and a $4,500 out-of-pocket max. You get from the deductible amount to the out-of-pocket max by paying co-insurance or co-pays. Once you reach the out-of-pocket max your health plan will pay 100% for covered essential health benefits.
What a crash course; however as mentioned earlier insurance plans and coverage can be very complex. The best was to know for certain how your plan works is to call the number on the back of your insurance card and speak with a representative and ask about the specifics of your particular plan. With therapy some plans have yearly visit limits or require pre-authorization. Our staff will call in your benefits and inform you of the information we are told by the insurance company. As a disclaimer I can’t stress enough how important it is to call and speak with the insurance company if you have any questions about upcoming or anticipated care or costs.
Bradley Meyer, DPT