Health Insurance Policy explained.
Learn the different parts of an health insurance policy. Learn how to decipher it and understand it so you can know what you are buying.
Copay is the amount you are going to pay at the doctors office. On a PPO plan, you typically see between a $20-$40 copay for a doctors office visit. Also, some newer plans have a limited number of copays that are covered, it may only cover the first two or three office visits per year before being subject to the deductible.
Copays also apply for prescription drugs. Prescription drug copays are often $15-20 for Generic prescription drugs. You will often see the summary of benefits use the short hand "G" to indicate the generic Rx copay For brand names it will be BF, which stands for Brand Name Formulary, and usually there's a separate deductible. Sometimes like a $500 brand name formulary deductible for brand name prescriptions. But sometimes as high as $7500 deductible for brand name drugs before the brand name prescriptions are covered with a $40 copay as example.
All those are copays, and they are only at the doctors office and the pharamacy that they're appling on your PPO Plan. On an HMO, you will see copays applying for pretty much everything, not just doctors office visits and at the pharamacy like on a PPO. On an HMO the copays cover at the hospital, and lab work, and things like that are covered with just a copay. But on PPO plans, everything except doctors office visits and drugs are subject to a deductible
What is a typical deductible? Right now when you sort PPO plans by price, it seems that there is a five thousand dollar deductible, on the high end. The deductible is what you pay before the plan starts to cover. A lot of people I talk to I am also suggesting an accident plan to help cover their dedictible in the event of an accident. The accident plan might not cover all of it, but at least it will cover some of the deductible.
Sometimes people think, "Oh, now I have to pay the whole five thousand out of pocket before they cover anyting and now it's going to cost me five thousaand dollars for that lab test." No, you get what is called a negotiated rate, so whoever your carrier is you're going to have a reduced rate for having that health insurance. So if that laboratory usually would have charged five hundred dollars for that CBC blood panel, supposedly through negotiation your health insurance company should have negotiated that down to maybe three hundred and fifty dollars. And so you would just pay your three hundred and fifty dollars. That counts towards your deductible and you don't have to pay the whole five thousand just for that three hundred fifty dollar CBC blood panel that your doctor ordered.
Coinsurance is where there are perentages. It used to be really popular to have like an 80/20 split on a PPO plan. You didn't used to see a lot of coinsurance on hmo style plans. You do now though. And you don't see 80/20 plans much any more. You now see 60/40 or even 50-50 splits I've seen on some plans. And occasionally you'll see 100% coverage after the deductible. That means, once you've met your deductible of five thousand dollars, if it says 100%, you don't have any coinsurance - which is pretty nice. It doesn't mean you pay 100%, it means they are covering 100%.
Usually the coinsurance has another cap you have to pay out to. So you might have a plan that has a $40 copay for doctors office visits, $5000 dollar deductible, then a 60/40 split up to another 3500 out of pocket. That would reach an out of pocket maximum total of $8500. How am I getting that? We are adding the $3500 and the $5000 together to get the $8500 out of pocket maximium.
Those are the typical parts of your health insurance policy. One rule of thumb that helps me is if you think of the copays outside a glass. All your copays, deductibles, lab expenses are all going to fill up the glass. This glass holds 5000 dollars worth of money that you poor in. Once the glass is full you start to spend money over onto a plate where there is co-insurance of another 3500 that is acrewing at a 60/40 split.
Once you've paid out of pockt, your deducitble and your coinsurance, then the insurance company starts to kick in at 100%.
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Hi, my name is Morgan Hege. My team and I help people find affordable health insurance from major reputable carriers here in California to protect you and your family. We are local, experienced, and friendly.