Learn about cost sharing: deductibles, copays, and coinsurance

All health insurance requires users to pay for some of the costs of health care services. This is called “cost-sharing” or “out-of-pocket” costs. Cost-sharing varies between different types of health insurance, but most have a copayment, coinsurance, or deductible amount. 

Types of agreements and cost-sharing situations

The amount the insurance company pays and the amount you are responsible for depends on your plan’s cost-sharing:

• Copayment: In the traditional copayment plan, you pay a fixed amount per service. For example, if your copay is $ 40, you are expected to pay $ 40 and your insurance will pay the remaining $ 45 ($ 40 + $ 45 = $ 85). You may have a copayment for emergency room services; check your plan for details of emergency services for non-urgent problems.
• Coinsurance: In the coinsurance model, you pay a fixed percentage for each service. For example, if your coinsurance is 20%, you would pay 20% of the allowed $ 85 (0.2 x $ 85 = $ 17) to the doctor and the insurance company would pay the remaining $ 68 ($ 85- $ 17 = $ 68).
• Deductible: With a deductible, you pay the full amount allowed for all services provided until you meet the deductible. If your insurance has an annual deductible of $ 1,000, you would pay the allowed $ 85 to the doctor. You would pay the full amount for 11 of those visits ($ 1000 / $ 85 = 11.8) before your insurance starts paying everything directly to the doctor. The deductible begins each new plan year. So if you go to a doctor 15 times for these types of visits, but at least 11 of those 15 visits are not within the same plan year, your insurance will not pay any of your costs.
• Maximum out of pocket: This is the absolute maximum you are expected to pay in cost-sharing within a plan year. Unlike your deductible, the out-of-pocket maximum refers to your cost-sharing agreement after you’ve met your deductible. An insurance plan with a $ 1,000 deductible could have an out-of-pocket maximum of $ 1,500, along with the 20% coinsurance. In that case, you would pay him the full $ 85 for 11 doctor visits under his deductible. After you’ve met your deductible, then you would pay $ 17 per office visit (20% coinsurance). Until you spend $ 500 in coinsurance ($ 1,500 – $ 1,000), or approximately 29 more office visits ($ 500 / $ 17 = 29.4). From that point on (40 total visits in a year). You would pay nothing more for your medical care for the remainder of the plan year.

To make it more complex, different cost-sharing agreements can be applied depending on different situations:

• Variable copays or coinsurance. A plan might have a $ 25 copay for each doctor visit, 20% coinsurance for each prescription drug, but a $ 10 copay for each speech therapist visit. Similarly, a visit with your pediatrician could incur a $ 30 copay, but a visit with a pediatric allergist could incur a $ 50 copay.
• Belong or not to the network. To encourage the use of in-network providers, a plan might have a 20% coinsurance for a network provider. But 50% coinsurance for a non-network provider. Continuing with the previous example, if the doctor’s allowed cost is $ 85. You would be responsible for $ 42.50 of their fee if you are not in your plan’s network. But only $ 17.50 if you are in the network. Most commonly, out-of-network doctors may not even accept the $ 85 allowance. And expect a total of $ 100 of the charge to pay. 
• Individual deductibles vs. family and out-of-pocket limits. This is important if more than one family member is covered under the same plan. For example, your plan may have a deductible of $ 2,000. If you spend $ 700 on allowed services for each of your three children in the plan. You will have met the family deductible, having to pay $ 2,100. However, if your plan also has an individual $ 1,000 deductible. You would still be $ 300 ($ 1,000 – $ 700) short of each child’s deductible.
• What counts against the deductible? Deductibles only apply to money you spend on covered services that are billed to the insurance plan. For example, you could reasonably spend $ 100 or more a year on over-the-counter products, such as fever medications (antipyretics ) and allergy medications. . However, since you paid with cash at the pharmacy and a claim was not submitted to your insurance plan, the insurance plan has no way of keeping track of what you spend. The $ 100 is not credited against your deductible. Similarly, you could spend $ 250 on glasses at the optometrist’s office. The optometrist (optometrist) may bill your insurance, but if your insurance determines that vision services are not covered, you are still responsible for the full $ 250 and receive no credit for the $ 250 against your deductible. However, in these cases, you may be able to use a Health Savings Account (HSA).

Prevention services for children

Preventive services for children, such as well-child visits and immunizations, may or may not be covered with no cost-sharing. You should carefully review your plan’s description of benefits for more details. The best time to review a plan is before you sign and agree to its terms.

Payment methods

Before visiting your child’s doctor, check the accepted payment methods for out-of-pocket expenses. Payment options can include cash, check, or credit card. Remember to bring your insurance card (insurance card) to all visits.

What is Coinsurance?

For its part, coinsurance is the percentage of participation that the insured must pay in a claim after having deducted the deductible. Both amounts (deductible and coinsurance) are paid by the insured, however, the difference is that the coinsurance is expressed as a percentage, which means that in the event of a major illness, the participation of the insured will also be greater.

There are insurers that contemplate the reduction of the coinsurance if the care is carried out in hospitals of a lower category than the contracted one. Some also eliminate coinsurance in the event of an accident.

Even when increasing the co-insurance lowers the cost of the premium, the reality is very risky and uncommon to handle one greater than 10%, since the higher the cost of the disease, the participation of the insured suffers great increase.

What is the Coinsurance Cap?

A concept as important as coinsurance is the COINSURANCE CAP. Generally, a maximum limit to be paid for coinsurance is established as $ 50,000 pesos. This limits the insured’s expense in the event of a catastrophic illness.

Take care not to contract a policy without a coinsurance cap, because, for example, the coinsurance can reach almost 100,000 pesos in the event of a disease of $ 1,000,000 pesos. In some cases, if you attend hospitals with a category higher than the one contracted, the insurer penalizes you with a higher coinsurance and a higher coinsurance cap, or even without a coinsurance cap. Always try to stay at the hospital level that you hire.