Understanding Insurance and Patient Benefits

What is a co-payment?  Typically, a co-pay is a specific flat fee that is paid for each medical service.  If the insurance company requires a co-pay, the patient will pay for whatever the set co-pay amount is, and then insurance will pay the remainder of the covered medical charges. 

Example:  If a patient comes in and the office visit is $200, and the insurance has a co-payment of $30, then the patient is only responsible for the $30 and the insurance will cover the remaining $170.

What is a Deductible?  A deductible is the amount of money the patient must pay each year before their health insurance plan starts to pay for covered medical expenses.  

Example:  If a patient comes in and they have to have surgery that costs $5,000, and the patient is responsible for paying the first $2,000.  After the $2,000 deductible is met, the insurance company will then pay a percentage of the bill, which is called the coinsurance.

What is Coinsurance?   Coinsurance is a cost-sharing requirement where the patient is responsible for paying a certain percentage and the insurance company will pay the remaining percentage of the covered medical expenses after the deductible is met.

Example:  If a health plan has a 20% coinsurance, once the deductible has been met, the insurance company will pay 80% of the covered expenses while the patient will need to pay the remaining 20% until the out-of-pocket limit is reached for the year.

What is Out-of-Pocket Limit?  The out of pocket limit is the maximum amount that a patient will pay out of their own pocket for covered medical expenses in a given year.  

Example:  For a plan that has a $2,000 out-of-pocket limit, the patient will pay a $1,000 deductible and $1,000 coinsurance while the insurance company covers the remaining amount of the bill.  Once this has been met, all other medical expenses will be covered 100% by the insurance company if any additional medical problems arise within that same year.