Copays/Co-payments– Most people are familiar with copays, a flat fee you pay towards services such as a doctor visit or prescriptions.
You walk into a doctor’s office, they often expect a copay. This is your initial payment for services no matter what your visit is for and is determined by your health care insurance plan. Some insurance plans allow you to see any doctor without a referral. If you do go out-of-network (meaning see a provider not covered under your insurance plan), your insurance provider may require a higher copay or your out-of-network deductible and coinsurance may apply.
Deductibles- This is the portion of your medical expenses that is NOT covered by a copay and you are responsible for 100% of the charge until you reach your deductible.
It’s like car insurance. Should you need to, you pay your deductible and then insurance kicks in to help pay the rest of the expenses.
The basic about annual health deductibles:
- Expense related to hospitalization, surgery, and procedures are typically applied to your deductible first.
- Lab tests, MRI’s, CAT scans, surgical costs, anesthesia, physical therapy, medical devices usually go toward your deductible first.
- Premiums are not applied toward the deductible. Deductible amounts are different for individuals and families. Deductibles are much lower if you see in-network (doctors covered by your insurance plan) versus out-of-network (doctors not covered by your insurance plan) providers; if you go out-of-network, you will have an out-of-network deductible which is higher and separate from the in-network deductible.
Coinsurance- Some people get confused about copay versus coinsurance. Just remember, they are NOT the same thing. When you reach your deductible, you must pay a percentage of the remaining costs- this is the coinsurance amount.
Let’s say you have a policy with 20% coinsurance. That means the insurance company will pay 80% of covered services after your deductible has been met and you pay the remaining 20%. However, you wont have to pay that 20% forever. You pay until you reach your out-of-pocket maximum (a maximum cap that you have to pay in a calendar year for medical expenses). Then your insurance will cover the rest of qualifying medical expenses for that calendar year.
The out-of-pocket maximum is a wonderful thing. Every insurance plan has this feature. Check your plan to see if copays, deductibles and pharmacy costs accumulate to the out-of-pocket maximum.