Health insurance has lots of terms for things that most patients do not understand or know what they mean. This article will explain what Deductibles, Co-Insurance and Co-Pays are, the differences between them and how they affect the patient.
A Deductible is a fixed amount of money that your insurance plan has designated as an amount the Patient must pay for all medical care provided to the Patient BEFORE the insurance company will pay anything. This amount will vary according to your insurance plan. Most Deductibles are ‘calendar year’ based, meaning that they start on January 1st of a year and end on December 31st of the same year. In this case, on January 1st the Patient’s Deductible begins for that year. All monies paid towards the Deductible in the previous year are erased and do not count towards the current year’s Deductible. There are some health insurance plans that have a ‘fiscal year’ based Deductible. In this case, the Deductible year could start on July 1st of a current year and end on June 30th of the next year. In both cases, every health insurance Deductible lasts for a 1-year time period before renewing. The Patient will be financially responsible to pay for all medical care provided to them until the cost of those medical services meets/exceeds the policy’s deductible amount. Once the Deductible amount has been met, then the insurance company will start to pay for medical care services according to the insurance’s plan benefits.
EXAMPLE: John’s insurance policy has a $3,500.00 calendar year deductible. On January 1st, John’s “deductible met” amount is set to $0.00 by the insurance company. When John has an appointment with his Primary Care doctor, the doctor’s office will file a claim to the insurance company. The claim gets applied to John’s deductible amount for $55.70. John has to pay his doctor’s office the $55.70 towards his unmet deductible. This process repeats each time John has medical care provided to him until his deductible of $3,500.00 is met.
This is a fixed percentage of medical care costs the patient is financially responsible to pay to their medical providers once their Deductible is met. After their Deductible is met, the patient is required to pay the Co-Insurance amount to their medical care providers until they either meet their Out-of-Pocket amount for the year OR the deductible year ends, whichever comes first. Most insurance companies have an “80/20” Co-Insurance benefit. In this case, once the patient’s Deductible is met then the insurance company will pay 80% of the patient’s medical care claims and the patient pays 20% to the provider of those services. This Co-Insurance percentage can vary according to each insurance plan’s benefits.
EXAMPLE: John has an office visit at his Primary Care doctor. A medical claim is submitted to his insurance company and the insurance company allows an amount of $55.70. Since John’s annual Deductible is met, the insurance company pays 80% of the ‘allowed’ amount ($44.56) and John pays 20% ($11.14) to the Primary Care doctor. This process repeats each time John has medical care provided to him until he either meets his annual Out-of-Pocket amount of the deductible year ends.
This is a fixed, set amount the patient is financially responsible to pay for specific medical care services. Typically this benefit is applied to Office Visits at doctor offices, both Primary and Specialty
EXAMPLE: John has an appointment at his Primary Care doctor office. John has a $20.00 Co-Pay for the office visit. John is financially responsible to pay that $20.00 Co-Pay to his Primary Care doctor for his