o Co-Pay - The amount of money you will pay out of your pocket each time you seek medical service, and almost every health insurance plan includes a co-pay system. For many insurance plans, each time you see a doctor or purchase a prescription drug, you will pay between $20 and $50 before your health insurance will pay any part of the cost – this is the co-pay. You’ll also be charged a co-pay for outpatient x-rays and surgeries and these are often more expensive than a doctor’s visit or prescription. Generally, co-pays are not credited to your deductible or co-insurance (see definitions below).
o Deductible - The amount of money you will pay before any health insurance benefits are paid. This amount is called the deductible. Deductibles vary but generally are in the amount of $250 to $1,500. Some health insurance policies today are offering deductibles as high as $5,000. Usually the higher the deductible the lower the premium (see below for definition of “premium”).
o Co-Insurance- After you’ve paid the amount of your deductible out of your own pocket, your insurance company begins to pay a portion of all covered healthcare expenses you incur. This is called “co-insurance.” Co-insurance pays until a limit is met, generally $10,000. After your deductible and co-pay, many health insurance programs pay co-insurance of only 80 percent of expenses up to $10,000.
How do co-pays, deductibles, and co-insurance relate? Let’s say you have a health insurance policy that has a $50 co-pay, a $500 deductible, and an 80 percent co-insurance. If you have outpatient surgery that costs $5,000, here’s what you will pay:
o $50 co-pay
o $500 deductible
o $890 co-insurance (20 percent of the remaining $4550 after co-pay and deductible since your health insurance company only pays 80 percent of expenses up to $10,000).
o Explanation of Benefits or EOB - The report you receive from your health insurer whenever you receive a medical service from any provider. It explains for each service how much was paid to the provider and what your responsibility will be for the deductible and co-insurance.
Next, we’ll use these terms to help you figure out which insurance plan is best for you and your family.
