Everybody should possess health insurance to cover both minor medical issues and major accidents. When selecting a plan, it is crucial to compare monthly premiums, deductible amounts and coinsurance rates before making your selection.
As part of your research, it’s also advisable to review customer satisfaction ratings and complaints to assess how a company responds to its customers. There are various plans available, such as HMOs and PPOs.
Coverage
No matter if it’s an individual/family policy purchased independently from employers or associations or group plans provided through work, coverage should always be the cornerstone of any health plan. A good policy will cover most or all major medical expenses.
Traditional and managed care insurance plans cover an array of benefits, such as tests, medication, hospital visits and treatment services. A portion of costs must still be covered – such as copayments, coinsurance or deductibles.
Many plans require consumers to utilize a specific set of doctors and hospitals referred to as the “provider network” or “network.” These providers generally agree to offer discounted health services at reduced rates for members insured through these plans; this type of managed care approach helps control health insurance costs. Some plans may even exclude certain items such as cosmetic surgery or name brand prescription drugs if there is an affordable generic version available.
Deductibles
The deductible is an initial out-of-pocket expense before your health care plan will cover costs. Once this threshold has been met, insurance providers typically reimburse 100% of covered healthcare expenses, less any copayments and coinsurance charges. Deductibles and out-of-pocket maximums reset at the beginning of each year.
Many health plans offer benefits before meeting their deductible, such as free preventive services or lower deductibles for family plans than individual ones.
Opting for a plan with a lower deductible is one way to lower your out-of-pocket costs, but be sure to compare its total costs including premiums and deductibles with similar plans. Also note that switching plans midyear means the new plan’s deductible applies, unlike with other forms of insurance where its cost can be prorated.
Copays
Copays are a form of cost sharing between health insurance companies and policyholders that splits medical service expenses evenly. Copays typically consist of fixed fees such as $30 for an office visit or $10 per prescription drug purchased, that are applied when service is rendered.
Some plans offer various copay structures; preferred provider plan (PPP) plans typically require copayments for inpatient hospital stays, while HMO plans typically offer flat monthly copayments for office visits. Other plans use combinations of copayments and coinsurance payments; for instance, paying 80% in-network provider cost and 20% out-of-network service provider costs can be common scenarios.
Understanding premiums, deductibles and copays is integral to selecting a suitable health care plan. Be sure to review your Plan’s Schedule of Benefits to obtain information regarding specific costs associated with services, medications and equipment that interest you – and remember preventive medical services are usually exempt from copayments or coinsurance charges.
Coinsurance
The Affordable Care Act offers some ways to lower health insurance copays, coinsurance and deductibles through cost-sharing reduction subsidies available on public marketplace health plans that meet specific actuarial values.
Coinsurance is an agreed upon percentage between you and your health plan that each pays towards covering medical expenses once you’ve met their deductible amount. These percentages depend on each service’s “allowed amount”, as defined in their certificate of coverage or summary of benefits document.
Your plan may pay less for in-network services compared to out-of-network charges because their allowed amounts tend to be lower. Coinsurance acts as risk sharing between you and the plan, so most plans include it as standard practice.
