How Do Deductibles, Copayments, and Coinsurance Work?

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Topic: How Do Deductibles, Copayments, And Coinsurance Work?

Making sense of health insurance is far from easy and understanding the jargon can be as confusing as learning a new language.

Whether you’re shopping for health insurance or trying to understand your current plan, we can help explain some of the tricky terms. Let’s start with deductibles, copayments and coinsurance.

Your copayment is a fixed rate that you’ll pay out of pocket every time you use your health plan. Copayments vary by plan and can change depending on the type of care you receive.

For example, the copayment Bob pays to visit his primary care physician is different than the copayment he pays for hospitalization, to see a specialist, and when he seeks out-of-network treatment.

Copayments also apply to medications and can vary for specialty and generic drugs.

Your deductible is the amount you’ll pay out-of-pocket each year before your insurance provider begins to cover any medical costs.

However, deductibles don’t apply to all services…most plans will cover routine doctor visits, prescription drugs, and preventive care before you’ve met your deductible. Once your deductible is met, your full benefits will kick in!

Some health plans also have coinsurance. Once you reach your deductible, coinsurance requires that you and your health insurer share the responsibility of paying for your medical expenses.

Let’s say Bob has a plan with a $1500 deductible and an 80/20 coinsurance.

If Bob’s costs are less than $1500 throughout the year, he’ll be responsible for paying 100% of the total costs. 
If Bob has a catastrophic injury or illness that requires a lot of medical care, he’ll first pay his $1500 deductible. His health plan will pay 80% of the remaining costs, leaving Bob responsible for the other 20%.

Hopefully, Bob’s situation has clarified some of the key terms to help you better understand the world of health insurance.

Learn more by visiting us online or by calling one of our personal plan advisors at 1-855-547-7734 to help find a plan that fits your needs.