Hello, lovely mamas. My name is Amber, and I want to be your personal guide in motherhood, high cost, and health insurance.
If you read my about me page, you read that I work for a major health insurance company. I want to talk about some of the most common questions I get asked every day.
Today’s question is: What is the difference between a deductible, coinsurance, and out-of-pocket?
A deductible is what you pay before your insurance will contribute. So, say you have a $500 deductible this means that you are responsible for the first $500 out of your own pocket. If the doctor you see charges your insurance $300 your insurance will take the contracted amount off so let’s just say that the contracted amount is $200. This means that the $100 that was taken off from the $300 is a write off for the doctor, however there is still that $200. Now if you have a high deductible plan that $200 now becomes patent responsibility until you meet your $500 deductible.
Coinsurance kicks in after you have met your deductible. So, let’s say you have met your $500 deductible, and you go to the same doctor again. If your coinsurance is 80/20 this means that your insurance will cover 80% of the cost and you will owe 20%. That same doctor charges your insurance $300 again, the contracted rate is $200, so $100 is written off again however instead of you paying $200 you only owe 20% of that $200 since you have met your deductible. This means you only owe $40 for that office visit.
Your out-of-pocket cost is the most you will pay in a year. So, if your out-of-pocket is $4,000 this means that the most you will pay in the year is $4,000 and your insurance will cover everything else at 100% after that. You should always check with your insurance to see if your deductible contributes to your out-of-pocket. Some plans it does and some plan it doesn’t. You should also check to see if your pharmacy contributes to it as well.
So, to sum up deductible, coinsurance, and out-of-pocket:
- Deductible=What you pay before your insurance will contribute.
- Coinsurance=You and your insurance sharing the cost.
- Out-of-pocket=The most you will pay for the year.
Next week we will look at what if it is a family plan. How does that work, as well as we will look at what does it mean if I have a copay plan instead of a high deductible plan?