Health insurance helps cover the cost of medical care. It includes doctors' visits, prescription drugs and services such as surgeries and hospitalizations.
It also protects you from unexpected bills and a grievance process to appeal denials. Understanding the details of your plan can be complex, so it's important to speak with an insurance representative to answer all your questions.
Deductibles
A deductible is the amount you pay out of pocket before your health insurance plan begins to cover your medical bills. It varies by plan and usually is a set amount you have to meet each year.
After you reach your deductible, your insurance company pays a percentage of the cost of any covered services you use. You also pay a copay or coinsurance for covered services.
Depending on your plan, you may need to pay a separate deductible for prescription drugs. These deductibles are typically smaller than your medical deductible and are used to make it easier for people with high prescription drug costs to begin receiving the cost-sharing benefits of their plans.
Deductibles are an important part of the coverage offered by many health insurance policies, and managing them can help you save money and better understand your plan. The best deductibles for you depend on your ability to withstand risk, the amount you expect to spend on health care each year, and how often you plan to visit a doctor or other healthcare provider.
Copays
Copays are fixed fees you pay for certain medical services. They are a standard part of most health insurance plans.
Most copays are less than $100 for routine care such as annual physicals or check-ups. For prescription drugs, however, copays can vary significantly depending on your plan.
In many cases, deductibles and copays are used as cost-sharing mechanisms that prevent people from seeking unnecessary care. Insurers argue that if patients had to share the costs of treatment, they would be less likely to abuse their insurance.
But copays and deductibles are costly and often prevent patients from getting the care they need. While they may have been intended as a way to prevent patients from abusing their benefits, the reality is that they limit access to quality healthcare and drive up costs for everyone.
Coinsurance
Coinsurance is a type of cost-sharing feature found in many health insurance plans. It requires you to pay a portion of your medical costs, such as charges for tests and office visits, after you meet your deductible.
This percentage is referred to as a “coinsurance ratio.” Most often, it’s expressed as an 80% / 20% split, with the insurer paying 80% and you paying 20%.
The coinsurance rate for a doctor’s visit, lab work or prescription drugs will vary depending on the insurance plan and whether the provider is in your network. If the doctor isn’t in your network, the coinsurance will be higher.
A high coinsurance percentage can be a significant part of your out-of-pocket cost, particularly if you have a serious health condition, need multiple medications or require hospital care. For these reasons, it’s important to consider your age and overall health before you choose a plan with a high coinsurance rate.
Explanation of Benefits
Having health insurance is not a luxury but rather a necessity. Without it, you might be stranded with medical bills and other unexpected expenses that can easily mount to thousands or even millions of dollars.
Luckily, there are many ways to make sure your family is covered. Whether you choose to buy your own coverage or are lucky enough to be covered by your employer, it is important to understand what you're getting and how it works.
The best way to determine which type of health insurance is right for you is to look for a well-designed plan that includes the following: a robust and easy to use online portal, comprehensive and detailed member services, a wide range of high quality providers, and a competitive cost structure. Using a quality insurance provider is the only way to ensure you get the highest value possible from your investment. You will be able to feel better about your future and enjoy life more knowing that you are covered.