Regardless of the type of health insurance policy you have, you must know the difference between copayment and cash. These and other out-of-pocket costs affect the amount you pay for health care that you and your family receive.
Key takeaways
- The copay is a flat fee you pay for a prescription, doctor visits, and other types of care.
- Insurance is the percentage of expenses you pay after you’ve paid your deductible.
- The fixed amount you pay for medical and prescription services before your money starts is deductible.
What is a deductible?
First, to understand the difference between money and copayment, it helps to get information about deductions.
A deductible is a fixed amount you pay each year for your health care before your plan begins to share the costs of covered services. For example, if you have a $ 3,000 deductible, you must pay $ 3,000 before your insurance fully begins.
If you have dependents on your policy, you will have a single deductible amount and a different (higher) amount for the family.
If you have a highly deductible health plan, you may be eligible to save money in a tax-advantaged health savings account.
What are copies?
Copies (or copies) are fixed amounts that you pay to your medical provider when you receive services. Copies generally start at $ 10 and work up from there, depending on the type of care you receive. Different copies generally apply to office visits, specialist visits, urgent care, emergency room visits, and prescriptions.
Your copy applies even if you haven’t met your deductible yet. For example, if you have a $ 50 specialist copay, that’s what you pay to see a specialist, whether or not you’ve met your deductible.
Most plans cover preventive services 100%, which means nothing will be owed to you.
Copies generally do not count toward your deductible but do count toward your out-of-pocket limit for the year.
What is coinsurance?
Insurance is the percentage of covered medical expenses that you pay after you’ve paid your deductible. Your health insurance plan pays the rest. For example, if you have an “80/20” plan, it means your plan covers 80% and you pay 20% until you reach your out-of-pocket maximum.
Still, money isn’t just about covered services. If you have costs for services not covered by the plan, you will be responsible for paying the entire bill. If you are not sure what your plan covers, check your benefits booklet or call your plan provider.
What is the out-of-pocket maximum?
Once you reach your out-of-pocket maximum, your health insurance plan covers 100% of all covered services for the rest of the year. Any money you spend on deductions, copies, and cash will count toward your out-of-pocket maximum. However, premiums are not included and anything you spend on services is not covered by your plan. As with deductions, you may have two out-of-pocket limits: individual and family.
In-network vs. out-of-network
Some plans contain two sets of deductions, copulas, cash, and out-of-pocket maximums: one for in-network providers and one for out-of-network providers.
Intranet providers are doctors or medical centers with whom your plan has negotiated special rates. Everything else is out-of-network providers and generally much more expensive.
Note that intranet does not necessarily mean close to where you live. You could have a North Carolina plan and see a network provider at the Cleveland Clinic in Ohio.
Whenever possible, be sure to use network providers for all of your health care needs. If you have certain doctors and facilities that you would like to use, make sure they are part of your plan’s network. Otherwise, it may make financial sense to switch plans during the next open enrollment period.
Copayment and Coinsurance Example
To help explain copies and money, here is a simplified example.
Let’s say you have an individual plan (no dependents) with a $ 3,000 deductible, a $ 50 specialist copay, an 80/20 coin, and a $ 6,000 maximum out-of-pocket limit.
You go to your annual check-up (free, since it is a preventive service) and you mention that your shoulder is injured. Your doctor sends you to an orthopedic specialist ($ 50 copay) for a closer look.
That specialist recommends an MRI to find out what’s going on. The MRI costs $ 1,500. You pay the full amount since you have not yet met your deductible.
You happen to have a torn swivel cuff and need surgery to repair it. The operation costs $ 7,000. You’ve already paid $ 1,500 for the MRI, so you must pay $ 1,500 of your surgery bills to meet your deductible and get the cash advantage. After that, your share is 20%, which is $ 1,100 in this example. In total, his broken rotation sleeve costs him $ 4,100.
The baseline
When you search for a health insurance plan, the plan’s reports always specify the premiums (how much you pay each month to have the plan), deductions, copays, cash withdrawals, and out-of-pocket limits. In general, premiums are higher for plans that offer more favorable cost-sharing benefits.
If you are generally healthy, a lower-cost plan with higher limits may work for you. However, if you expect to incur significant health care costs, it may be worth spending more in premiums each month to have a plan that covers more of your costs.
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