Insurance and Billing

Facts on Deductibles, Co-payments, and Coinsurance

Deductibles, co-payments and coinsurance provide ways to share the cost of medical care, making coverage affordable.

Deductibles

Deductibles are provisions that require the member to accumulate a specific amount of medical bills before benefits are provided.

For example, if a member’s policy contains a $250 deductible, the member must accumulate $250 in covered expenses before reimbursement begins. Most traditional plans feature a $200 to $500 deductible, and then pay 80% to 100% for covered services. With most plans, the higher the deductible, the lower the premium.

Co-Payments

A co-payment is usually a fixed fee ($5, $10, $15, $20) the member pays to providers at the time covered services are performed. The level of co-payment is determined by the benefit option. Co-payments are applied to office visits, emergency room visits, hospital admissions and other medical care under some products.

Coinsurance

After deductibles are met, the plan begins paying a percentage (usually between 80% to 100%) of covered services. The remaining amount, called coinsurance, is borne by the member. Coinsurance is a form of cost sharing.

What is Coordination of Benefits?

Coordination of Benefits is a common provision in most benefit plans. It applies when a member has more than one health coverage plan in effect at the time services are rendered. Specific, industry-wide rules exist for determining which plan pays first (primary) on these expenses and which plan pays next (secondary).

Additional rules for determining which plan pays first are, generally:

Tips on Knowing the Rules

In some instances, a person may have three plans in effect at the same time. This is common for persons who become Medicare-eligible while their spouse is still actively employed. In this instance, the actively employed spouse’s plan pays first (because federal law requires it), and the retiree’s Medicare coverage pays second. Then, a benefit sponsored by the retiree’s employer pays third (tertiary), after Medicare.

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