The one question I know I’ll hear on about half of my appointments with clients is “how do deductibles work”. Before you can choose the right plan and medical coverage for your family, it’s essential to know how health insurance works. Once you start wondering “how does a deductible work,” it’s likely because you’re in a situation where you need to by coverage for yourself. You’re ready to start chatting with somebody regarding your health insurance choices.
4 Parts to Most Policies…Deductibles, Co-pay’s, Co-insurance and Max Out of Pocket
First off, the deductible is simply the amount you’ll pay out of your pocket for healthcare before your insurance company begins to pay for your healthcare expenses. More often than not, the medical deductible for your policy is applied every year and typically restarts with the new calendar year. Your health insurance plan might cover some medical needs before you meet your annual deductible. These benefits are usually in the form of co-pay’s. A co-pay is a set dollar amount that you agree to pay for certain services. These are typically minor or routine services, such as primary and specialist doctor’s visits, prescription drugs and urgent care visits.
Depending on your plan, after the deductible is met your health insurance policy may pay 100% of charges or you may have co-insurance. Co-insurance is a percentage of cost that you and your insurer are responsible for once the deductible is met. Common co-insurance amounts are 70/30 and 80/20. For example, if you have a policy with co-insurance of 80/20 this means that once your deductible is met you agree to pay 20% of the charges and the insurance company agrees to pay 80%, until the Max out of pocket is met. So what is the max out of pocket? The max out of pocket is the most money you can spend on covered services before the health insurer has to pay 100% of covered services. As an example, someone with a $2,000 deductible, 80/20 co-insurance and max out of pocket of $3,000 would pay the first $2,000 out of their own pocket, the next $5,000 in charges that would pay 20% (or $1,000) and after that they would pay nothing.
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To find out more about your health care options, go to IndyHealthAgent.com or give us a call. We’re a broker for most major insurers in Indiana and can help you find the right plan for you and your family, at no additional cost to you. Let us help you create the right plan for your health insurance needs.