How do co-insurance, copays and deductibles work?

How do co-insurance, copays and deductibles work - This information will help you if you're shopping for health insurance and have questions about how it works. When both you and your health insurance company pay part of your medical expense, it’s called cost sharing. Deductibles, coinsurance and copays are all examples. Understanding how they work will help you know when and how much you have to pay for care.

Deductible

How does a deductible work?

• A deductible is the amount you pay for health care services before your health insurance begins to pay.

Let's say your plan's deductible is $1,500. That means for most services, you'll pay 100 percent of your medical and pharmacy bills until the amount you pay reaches $1,500. After that, you share the cost with your plan by paying coinsurance and copays.

Co-insurance

• Coinsurance is your share of the costs of a health care service. It's usually figured as a percentage of the total charge for the service. You start paying coinsurance after you've paid your plan's deductible.

Here's how it works. Lisa has allergies, so she sees a doctor regularly. She just paid her $1,500 deductible. Now her plan will cover 70 percent of the cost of her allergy shots. Lisa pays the other 30 percent; that's her coinsurance.

Copay

• A copay is a fixed amount you pay for a health care service, usually when you receive the service. The amount can vary by the type of service. You may also have a copay when you get a prescription filled.

For example, a doctor’s office visit might have a copay of $30. The copay for an emergency room visit will usually cost more, such as $250. For some services, you may have both a copay and coinsurance.

What does this mean for me?

When choosing a plan, think about how much you use your insurance and how much protection you want against unpredictable expenses. Then look at the plan's deductible, coinsurance and copays and find what works best for you. Here are a few things to consider.

• Deductible: A plan with a high deductible will have cheaper monthly payments. But you'll pay a lot upfront when you need care. You can also look for plans that cover some services before you pay your deductible.
• Coinsurance: Typically, the lower a plan's monthly payments, the more you'll pay in coinsurance. 
• Copays: If you visit your doctor or pharmacy often, you might want to choose a plan that has a low copay for office visits and prescriptions.

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Insurance Deductibles and Co pays Insurance

Insurance Deductibles and Co pays Insurance - Health care costs have gone up for the sixth year in a row, increasing at rate higher than inflation. Those who can still afford health care are often finding that their benefits are being trimmed while their co-pays and deductibles are increasing. With these growing costs is the growing importance of getting the most out of your health care coverage. Unfortunately, health care policies are often complicated and confusing, filled with jargon that can confuse anyone without a law degree.

So let's start with a few basic terms: a co-payment and a deductible. Once we decipher what they mean, we will attempt to explain how they are used in different types of health insurance plans. Perhaps a little bit of knowledge will save you some health care cash.

A co-payment, or co-pay, is the flat amount you pay at the time of a medical service or to receive a medication. Each health insurance plan establishes these fees up front -- they are often printed on your health insurance card. Insurance companies use these co-pays in part to share expenses with you. In addition to cutting a small portion of the costs, the co-pay is also used to prevent people from seeking care for every trivial medical condition they might encounter.

Many health benefits are being trimmed while co-pays and deductibles are increasing.

In this way, co-pays can save an insurance company a substantial amount of money. However, while the co-pay has been found to lower costs by making people think twice before running to the doctor over a case of the sniffles, they might also prevent people from seeking necessary medical attention. For example, a person with a chronic condition may need to see four doctors over the course of a month, all of which require a $25 co-pay. 

However, if that patient cannot afford $100 each month, he or she will most likely skip one, if not all, of those appointments. Co-pays can often total hundreds of dollars each month if you have several health ailments. In these cases, many patients begin to pick and choose which medications they deem necessary, making for a potentially dangerous situation. But most would say that the alternative -- no health insurance -- would be worse.

Don't Confuse Co-Payment and Coinsurance Coinsurance and co-payments are not the same thing. A co-payment is a specific amount that you pay at the doctor's office before you meet your deductible. Coinsurance is a percentage of a provider's charge that you may be required to pay after you've met the deductible. When you've met your deductible, you'll have to pay coinsurance (usually 20 percent of the provider's charge) until you reach your out-of-pocket maximum. After that, the insurance company will pay for all covered services to the policy maximum for the remainder of the year

Now that we've defined co-pay, let's move on to the deductible. ­

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