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Understanding co-pays, deductibles, and co-insurance
Deductibles, co-insurance, and co-payments basically describe the costs you share with the insurance company and pay to physicians and other providers for your health care.
Let’s start with the deductible, because that’s the amount you typically have to pay first before your insurance starts to cover much of your health-care costs. Say you have a $1,000 deductible for the year. That means you’re responsible for paying the first $1,000 of your medical expenses before the insurance company helps pick up the rest. You might meet that deductible in one hospital stay, or you could meet it throughout the year in multiple doctor visits. Because your insurance policy covers one year at a time, you would meet that deductible once a year, and it resets when you renew your insurance. And depending on your plan, once you’ve met your deductible, your insurance will start to cover a greater portion of your medical expenses.
Which brings us to the co-insurance, which is different. Instead of a fixed amount, like the deductible, the co-insurance is the percentage of a particular medical cost that you are responsible for. Let’s say it costs $100 for an X-ray and your co-insurance is 20 percent. You would pay $20 of that cost, and your insurance would pay the rest, $80. Depending on your plan, that $20 could go toward your deductible; or sometimes the co-insurance won’t kick in until after you’ve met your entire deductible. And the co-insurance amount can vary depending on whether you receive medical services in or outside of your health plan’s network.
Lastly, each time you visit the doctor, you’ll typically pay what’s called a co-payment or “co-pay.” It’s usually a small fixed fee, like $25, that you pay up front at each visit, not something you split with your insurance plan. It can also vary depending on the medical service.
But Marketplace plans must cover certain preventive services, like screenings and immunizations, without making you meet your deductible, or pay co-insurance, or co-payments. That’s if you get those services in-network.
And keep in mind that the health-care law puts a limit on your out-of-pocket medical expenses each year. Once you reach that limit, your insurance usually covers 100 percent of your medical expenses.
What are the limits on out-of-pocket costs?
The health-care law puts a limit on what you pay each year out of your own pocket for the medical expenses covered by your insurance, called “out-of-pocket limits.” For 2014, the out-of-pocket limits are $6,350 for an individual plan, and $12,700 for a family plan for the year. That’s the most you would pay for the year, and after you reach that limit, your health plan pays for 100 percent of the services it covers. What counts toward your out-of-pocket limits? It doesn’t include your premiums. But depending on your health plan, it can include costs like deductibles, co-insurance, co-pays, and sometimes care that’s out of your plan’s network.
Contributed by the Texas Medical Association.
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