The Costco #costcoconnection actually has some pretty good articles.
This is a topic that unfortunately many don’t understand or take the time to understand how it impacts them during the year.
When I was in private practice, I had so many conversations with patients and prospective patients about deductibles, copay, co-insurance, and especially towards the end of the year…out of pocket max
- Deductible: most all insurances now have a deductible. This means: the amount of money that the patient has to pay(after adjustments) before the insurance company will start paying their part.
Check out the funny video in the comments to learn more about adjustments.
If a patient has a $5000 deductible, it means that the patient is paying all of the medical bills in whole for the first $5000 before the insurance company kicks in.
Why does this matter?
If you have a high deductible and don’t plan on spending more than $5000 in a year, it may be better to go through a cash based medical practitioner instead of using insurance.
The cash based professional may actually be cheaper when averaged over the course of a year, even though you still are paying the premium (the amount you pay out of your paycheck every 2 weeks etc) to carry the insurance to cover the risk of major medical issues.
If you know that you are a frequent flyer of the medical system, then purchasing a lower deductible may be more advantageous than the high deductible plan.
This takes some analysis and guess work every year to determine which plan one will buy into.
- Copay/co-insurance: after you paid your deductible, the insurance company will now start to pay for some or all of your medical care after this point, depending on what your insurance is contracted to pay. It’s common to see insurances pay for 80% of the ADJUSTED BILL, and the patient is responsible for the other 20%.
This means that you first pay for your premium (the amount coming out of your check to have the right to carry insurance, the n You pay your deductible: the amount of money you have to pay out of pocket before you trigger the insurance paying for anything to begin with AND THEN YOU PAY THE COPAY OR CO-INDIRANCE: which is the part you agreed to share of the payment with your insurance company of your medical bills.
- Out of pocket max: this is like the heavens have opened (depending on the perspective). This means that you have spent so much on your own healthcare throughout the year that the insurance company now says: you’ve been tortured enough, we’ll cover everything from here.
This means that the insurance company will now start paying for everything (heavens opening up and angels singing), BUT it also means that you were so sick and needed so many procedures and testing throughout the year that you spent through your premium, deductible, and copays/co-insurance.