What is the difference between Deductibles, Co-Payments, and Co-Insurance?

It’s that time again.  Each New Year brings about the dreaded rollover of deductibles. The Arthritis and Infusion Center has a few important tips and explanations to help you navigate through the world of insurance.  

A basic understanding of the most common insurance terms will ease tension and frustration at the beginning of the year.  The most frequent terms referred to by your insurance and medical providers are Deductibles, Co-payments, and Co-insurance.  

Deductibles

A deductible is a set amount of money, determined by your insurance provider, which is due from the patient before the insurance provider will start to pay.  In simple terms, you, the patient, must pay that set amount of money, from your pocket, before your insurance will pay any money toward your medical bills.  Typically, deductibles run for a calendar year, and will zero out each January 1^st. 

Example:  Your annual deductible is $500.  Your medical bill is $120 and you have not met your annual deductible.  You will be responsible to pay your medical provider the $120 bill until you have satisfied the $500 deductible.  You will still have $380 remaining before the deductible it is met.

 Co-Payments

Typically, a co-payment is a fixed dollar amount attached to a medical office visit, procedures, or medications.  “Co-pays” do not apply toward the annual deductible. Co-payments are a separate expense to the insured. Co-payments are often a money saving advantage for patients that do not require frequent medical treatment.

Example:  A regular office visit to your primary- care physician has a co-payment of $20.  You are required to pay the $20 and your insurance provider will pay the remainder of the visit. 

Co-Insurance

This is much different than co-payments.  Co-insurance is a percentage of a medical bill that is due from the patient after the annual deductible is met.  Depending on the particular policy, a co-insurance may apply to physician visits, procedures, and medications.  Once the annual deductible is met, the insurance provider will pay the medical provider according to the set contract.  After the insurance provider has paid their portion, it is then the responsibility of the patient to pay the percentage remaining (co-insurance).  A very popular co-insurance scenario for insurance providers is an 80/20 split.  This means the insurance provider pays 80% of the bill and the patient pays 20%.

Example:  Your monthly treatment costs $500.  Your annual deductible is met and your insurance company pays at a rate of 80/20.  Your co-insurance is 20% of the allowable amount.

Understanding your medical expenses can be very confusing.  Don’t be afraid to ask questions in order to obtain a full explanation of charges, payments, and amounts due from you.  A good rule of thumb: always ask medical providers questions before you have a procedure.  Ask about possible charges, if prior-authorization is required, and their in-network status.  A little legwork, prior to your visit to a physician, could save you thousands!             

Medicare Advantage Plans: What You Need To Know

Medicare Advantage plans are very popular and are a wonderful way to combine three traditional Medicare policies and even add an extra coverage without purchasing a separate policy.  However, be extremely careful when choosing this type of policy.   As with any insurance plan, there are advantages and disadvantages to these particular combined plans.

By definition, Medicare Advantage Plans are a combined Medicare policy that will take the place of traditional Medicare Part A and B and often Medicare Part D.  These plans are offered by a private insurance company that is approved by Medicare, and have a set monthly premium.  Medicare Advantage plans are not supplemental coverage to traditional Medicare.

Medicare Advantage Plans would cover the traditional healthcare cost that are usually covered by traditional Medicare to your doctors, hospitals, and pharmacy.  In many cases you may also purchase additional coverage to include vision, dental, and hearing.  However, keep in mind that additional coverage equals additional premiums. 

There are a few disadvantages to this type of plan.  Here are a few questions you should consider before choosing a policy: 

·    Are you required to choose a physician that accepts, and participates, in Medicare Advantage Plans?

·    Are you required to have referrals to specialists, outpatient or radiology services?

·    Does the policy have a flat copay for physician services, or is there a deductible and coinsurance?
·    What does the prescription policy cover?  Is there a mail-order supply company offered?

·    Am I locked into the policy for a specific amount of time before I can change back to traditional Medicare or switch to a different policy?

·    Am I purchasing this policy from a reputable company with actual patient reviews of their product?

·    Is there a limit on how much this policy will pay out in one year?

There are many more questions that need to be considered before you make such an important decision for your healthcare needs.  The point of this blog is to get you thinking about your current healthcare situation, policy, as well as your future needs.  Take time, ask questions, and get multiple quotes for coverage. 

DEDUCTIBLES: What to Expect January 1st

There are many concerns regarding the cost of healthcare these days. Now it is more important than ever to know the details of your policy and formulate a budget for your healthcare needs. The Arthritis and Infusion Center understands that healthcare language can often be confusing. We have compiled a few of the most commonly used terms that refer to healthcare insurance policies.

Healthcare definitions according to the Medicare website: 

• Assignment - An agreement by your doctor, other health care provider, or supplier to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.
•  Coinsurance - An amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%).
• Deductible - The amount you must pay for health care or prescriptions before Original Medicare, your prescription drug plan, or your other insurance begins to pay.
• Medically Necessary - Services or supplies that are needed for the diagnosis or treatment of your medical condition and meet accepted standards of medical practice.
• Medicare Approved Amount - In Original Medicare, this is the amount a doctor or supplier that accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges. Medicare pays part of this amount and you’re responsible for the difference. 

Typically deductibles renew on January 1st each year. In other words, the slate is wiped clean from the previous year and you are required to pay your annual deductible again. Keep in mind, when making your healthcare budget, often deductibles and coinsurance will be collected at the same time from your provider until the annual deductible is satisfied. Be prepared, before your office visit, with the necessary monetary means to satisfy your obligations at the time of the service.

The Arthritis and Infusion Center is ready to help. If you are unsure of your policy’s deductibles or coinsurance, give us a call and we will be more than happy to help you determine this information. An informed patient is a happy patient.