Copay, Co-Insurance, Deductibles and Out of Pocket Maximum

Insurance Authorizations for PAHUnderstanding the basic terminology of your health insurance is vitally important for patients with Pulmonary Hypertension.  As a consumer of health care you need to understand how the system works and the language the insurance company uses to describe their coverage.

Deductible

A deductible is the amount of money that the patient must pay before their insurance begins to cover anything.  However, there are certain exceptions to this (at least as of November 20, 2016).  Under the Affordable Care Act, your insurance is required to pay for certain preventative care items prior to your deductible.  This includes vaccinations and annual exams, mammograms and certain other items such as laboratory tests that are part of preventative care.  Deductible amounts can vary widely from a few hundred dollars to thousands of dollars (these are referred to as high deductible plans).

Copay

A copay is the amount of money that the patient is required to pay when they check in for a visit.  Over the years, the amount of copays has risen dramatically.  Many plans have a lower amount for your primary care doctor and a higher amount for specialists.  Copays do not count towards your deductible for most plans. However, as of 2014 copays do count towards your out of pocket maximum.  As healthcare costs have risen, insurance companies have steadily increased the amount of copays.  In the past, many plans had $10 co-pays.  Now a copay of $75-100 is not uncommon.

Co-Insurance

Co-insurance is the percent of the bill that the patient must pay.  For most insurance plans the co-insurance rate varies if the provider (or hospital/imaging center) is in network or not.  For example, in-network co-insurance usually is 20% and out-of network co-insurance is 40%.  This creates strong incentives for patients to use in-network facilities and doctors.

Out of Pocket Maximum

This simply means that after this amount is reached you have no further bills to pay.

Putting it Together with an Example

Let’s imagine that it is the beginning of the year (January 2nd) and I have to see my specialist for a problem.  I check in with the receptionist and she asks for my copay of $50.  Next I see the doctor and check-out.  A week later I receive a statement for $150 for the total visit charge.  My insurance pays nothing because I have not yet met my $500 deductible.  Because I have already paid $50 dollars in the co-pay I have $100 remaining to pay.  It is worth noting that even though my insurance is not paying anything yet, the rates that the doctor charges are those agreed to by the insurance company.  Now let’s fast forward to November the same year.  It has been a difficult health year and I have had many doctor visits.  I have met my deductible many months ago.  Now I return to see my specialist again and I check in with the receptionist.  I pay the $50 deductible.  I see the doctor and a few weeks later I receive a bill for $150.  I already paid $50 in the copay.  Now I have 20% coinsurance on the remaining $100.  My insurance will pay $80 and I will have to pay the remaining $20.

Now a week later I have an emergency surgery.  My hospital bill comes to $20,000.  Fortunately, I just met my out of pocket maximum.  This means that for the remainder of the calendar year I will not have to pay anything for my health care.  Due to a provision in the Affordable Care Act, since 2015 even prescription drug costs count towards the out of pocket maximum.

Deductible:  amount you pay before your insurance starts paying (with certain exceptions)

Copay:  amount you pay for each visit or test

Co-insurance:  the percentage of the bill that the patient pays after the copay until the out of pocket maximum is reached

Out of pocket maximum:  the most amount of money you will pay in a year