Deductibles, Coinsurance, Copays, and In-Network, Oh My!!!

In honor of Black Friday, today’s blog might be a good read if you are shopping for insurance, trying to figure out what all these vocabulary words mean, or , perhaps you are up late and can’t sleep…

This link from BCBS of Michigan is very helpful.

If you’re not interested in the source, but want the info, here it is:

When both you and your health insurance company pay part of your medical expense, it’s called cost sharing. Deductibles, coinsurance, and copays are all examples. Understanding how they work will help you know when and how much you have to pay for care. First, we will delve into what each cost sharing piece entails, then we will explore what choosing a provider for network plans looks like.

Deductible

  • A deductible is the amount you pay for health care services before your health insurance begins to pay.

Let’s say your plan’s deductible is $1,500. That means for most services, you’ll pay 100% of your medical and pharmacy bills until the amount you pay reaches $1,500. After that, you share the cost with your plan by paying coinsurance and copays.

Coinsurance

  • Coinsurance is your share of the costs of a health care service. It’s usually figured as a percentage of the amount allowed to be charged for services. You start paying coinsurance after you’ve paid your plan’s deductible.

Here’s how it works: Lisa has allergies, so she sees a doctor regularly. She just finished paying her $1,500 deductible. Now, her plan will cover 70% of the cost of her allergy shots. Lisa pays the other 30%; that’s her coinsurance. If her treatment costs $150, her plan will pay $105 and she’ll pay $45.

Additionally, if Lisa has a PPO plan, she has the option to see any doctor she wants. If she goes to an out-of-network doctor, her plan will still share the cost, but her percentage of coinsurance will be higher. And, if the medical service she gets is more than what her plan would pay for an in-network doctor, she’ll have to pay the difference.

(Learn more about the difference between in-network and out-of-network providers below.)

Copay

  • A copay is a fixed amount you pay for a health care service, usually when you receive the service. The amount can vary by the type of service. You may also have a copay when you get a prescription filled.

For example, a doctor’s office visit might have a copay of $30. The copay for an emergency room visit will usually cost more, such as $250. For some services, you may have both a copay and coinsurance.

What does this mean for me?

When choosing a plan, think about how much you use your insurance and how much protection you want against unpredictable expenses. Then look at the plan’s deductible, coinsurance, and copays and find what works best for you. Here are a few things to consider.

  • Deductibles: A plan with a high deductible tend to have have cheaper monthly payments. But you’ll pay a lot upfront when you need care. You can also look for plans that cover some services before you pay your deductible.
  • Coinsurance: Typically, the lower a plan’s monthly payments, the more you’ll pay in coinsurance.

All this might help answer some of the questions from the back of your insurance card, but what in the heck is In-Network and Out-of-Network??

In-Network vs Out-of-Network

An article straight from the CMS (Centers for Medicare & Medicaid Services) website explains: “A provider network is a list of the doctors, other health care providers, and hospitals that a plan has contracted with to provide medical care to its members. These providers are called “network providers” or “in-network providers.” A provider that hasn’t contracted with the plan is called an “out-of-network provider.”

An in-network provider typically pays to be in the group and/or signs a contract with the insurance agency to offer a service at a lower cost in that plan. An out-of-network provider does not have a signed contract with the insurance company, and usually has a higher cost to the consumer.

Brenda’s In vs Out of Network Comparison:
Wal-Mart vs Le Boutique

Knowing the lingo of each plan is great, but does nothing for helping the consumer pick the right provider for his or her needs. My favorite comparison is Wal-Mart vs Le Boutique:

There are things I will go to Wal-Mart for such as toilet paper, paper towels, batteries, safety pins, etc. But, there are other items I prefer from Le Boutique like nickel-free earrings, all-natural makeup, and densely woven bamboo sheets.

Relating medical care to retail: Do I want exquisite attention to detail and special consideration for what is going on with me? If yes, then want to find the medical provider who is set up for those custom, selective needs who can also provide unique care tailored to me–even if they might be out of network with my insurance plan. If this is more of a Wal-Mart, run of the mill situation, then a mass volume clinic who is in my network might do just fine.

Take away pearl: I know I might pay more for healthcare services if certain clinic or clinician is not in my insurance plan’s network when compared to the mass volume clinic, but the high-class services the out of network group provides are worth it to me.

I hope this helps clarify some of the muddy waters of healthcare and finding a provider.  If I can be a resource, please contact me or my team at Monarch Physical Therapy and we will gladly help!

Uniquely yours,

Brenda

Brenda Bryson, PT, MPT, LMT

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