Health Insurance Basics
Even with the changes in the health care laws, what is covered by a health insurance policy is difficult to understand. In order to avoid medical debt that can result from improperly billed or processed medical claims, you need to have a basic understanding of some of the most utilized medical billing terms.
What are Health Insurance Deductibles?
A deductible is the dollar amount that an insured person is responsible to pay for their healthcare before their insurance will pay anything towards that healthcare. There can be an in network and an out-of-network deductible for each policy, as well as one for the individual and the family. For example, if you have a $2,000 deductible, you are responsible to pay the first $2,000 in medical expenses before your insurer pays anything towards those claims. This limit is for all medical claims, not per doctor or facility. And the deductible is based on allowed amounts for a service, not for the amount charged by the doctor or the facility. Again, as an example, a doctor could charge $200 for a visit, but an insurance company could allow $120 for that charge. In this example, $120 would be applied to your deductible.
What are Health Insurance CoPays?
A copay is a set amount of money that an insured will pay for a given service. Copays can vary in amount for in network vs out-of-network providers, tests, emergency room visits, preferred providers, and the like. Most people are aware of copays for doctor visits. However copays are now being applied to other services, including some testing. Copays typically do not apply until the deductible has been satisfied.
What is Coinsurance?
Coinsurance is a percentage of a charge for a medical service that an insured is required to pay. Different from a copay, coinsurance is not a fixed rate. It varies with the cost of the service. Like a copay, it applies after the deductible has been reached. For example, a doctor’s visit charge is $200. The allowed amount is $120. If you have a coinsurance rate of 10%, you are responsible to pay $12 and the insurance will pay $108.
Understanding these basic financial requirements of a health insurance policy will help you avoid medical bill problems.