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:
- For your health expenses, your plan pays before your spouse’s. Medicare usually pays first, if you are not covered by a plan through someone’s active employment.
- The plan of the spouse who has the earliest birthday in the year pays first on children. If two carriers can’t agree on who pays first, the coverage which has been in effect the longest pays first.
Tips on Knowing the Rules
- Read your plan documents and get a good understanding of what they mean. Speak with your employer or customer service representative if it gets confusing.
- Some plans will coordinate (or pay as secondary) up to charges. Others will only coordinate (or pay as secondary) up to what they would have paid if they had been primary. You will have a good chance of getting all of your expenses covered if a secondary plan coordinates up to charges.
- Don’t be disappointed if the combination of all your coverages do not pay more than the amount of the original bill. Your health coverage was designed to help with your health care expenses, not provide extra income.
- If you are covered by two managed care plans, such as a combination of HMOs or Point of Service Plans, you may be able to maximize your benefits by choosing the same primary care physician in both networks. You may find your secondary plan will pick up the office visit co-pays, emergency room deductibles and hospital admission co-payments you pay out of your pocket (under your primary plan) when care is properly coordinated under both plan’s 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.
