Devilish Details: Why These Numbers Matter to You

ABC Insurance Bronze Plan $6500/50 – your eyes are glazing over already, aren’t they? Insurance plans are so danged detailed when all you want to know is how much it costs each month and what you have to pay to see the doctor. But not knowing those details can really hurt you in the long run. Here’s a basic primer on what some of the most important mean.

Deductible: With health insurance, unlike your car insurance, this is an annual figure. Once you meet it during the coverage year (fancy for the year you’re paying for) you don’t have to meet it again. Whew – who’d be able to pay $6500 every time they needed to see the doctor – or be dumb enough to?  The reason it matters: some features of your plan may not pay until you’ve met your deductible.

For example, your plan has a 50% coinsurance AFTER deductible for doctor office visits. That translates to you are paying 100% of your doctor office visit costs until your deductible is met – which may be a while if you have a $6500 deductible. Once met, you only pay half of the cost of your doctor office visit. Which brings us to…

Coinsurance: Many plans have coinsurances – some plans have them exclusively in lieu of copays. That’s not necessarily bad – but they behave differently from copays.

Example: your plan has a 20% coinsurance BEFORE deductible. When you visit the doctor you pay 20% of whatever the doctor charges and your insurer pays the other 80%. Same thing happens if the coinsurance is after deductible – but you’re paying full price until the deductible is met.

Copay: This is a set payment amount outlined in the plan. That means you know walking in the door what you will pay for your doctor office visit – as long as the copay occurs before deductible (which is often the case) or your deductible has been met.

Yes, really. Assuming before deductible, your copay for an office visit is $50. You go to the doctor and pay $50 – the insurer pays whatever balance. But if after deductible, you go to the same doctor and pay $200 because that is what your doctor charges for an office visit. In both cases, the amount you pay counts against your deductible but in the second case you are paying 100% of the cost until the deductible is met.

Maximum Out of Pocket: This means what it says – it is the maximum you will have to pay for covered services in a coverage year. Healthy people rarely get close to this – but we’re all one car accident away from a costly hospital stay – and this is the number that may keep you out of bankruptcy.

Your plan has a Maximum Out of Pocket of $7150. You don’t use your insurance most of the year – you’re healthy and only used the free check up. Then, against your better judgment, you let your friends goad you into a bungee jumping trip. You survive the jump but fall off a hotel terrace at the obligatory survival party later that night. Three nights in the hospital, four orthopedic surgeries and several dozen lectures from your doctor later, your savings is $7150 lower than it was – and you have met the Maximum Out of Pocket for the year. Jumping up and down for joy, you land wrong and sprain an ankle – but the next ER visit and three lectures from your doctor are all paid 100% by your insurance company.

The next year you decide to use the Cost Share Reduction you received because your friends want to go sky diving in the spring…

Kidding aside, these devilish details are important to your bottom line – ignore them at your peril!

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