Health Insurance Articles
Factoring Deductibles and Co-insurance Into Your Health Insurance Expenses
2011-02-02
When purchasing health insurance and beginning to use health insurance coverage, it is important to remember the presence of deductibles and co-insurance expenses when estimating the annual costs of health insurance coverage. While health insurance coverage can significantly reduce the overall cost of obtaining and maintaining a comprehensive health care program, and having health insurance is simply vital with ever increasing costs of obtaining health care services, having health insurance coverage is not a blanket fix for bearing the individual costs of maintaining health and wellbeing.
Each health insurance policy will structure out of pocket costs, called deductibles and co-insurance, differently, and each health insurance carrier will offer different levels of deductibles to help consumers manage health care costs, but the presence of deductibles and co-insurance is a health care cost reality that consumers must be prepared for.
When factoring deductibles and co-insurance into overall health insurance expenses, it is important to understand what these terms mean. A deductible is the amount that must be paid out of pocket before reimbursement for health care expenses will be provided. While there are often preventative care services, such as annual exams and routine visits to the primary care doctor, that do not require the deductible to be met before they are covered, any expenses beyond simply visiting the doctor or accessing available preventative care benefits will be subject to meeting the set deductible for that health insurance policy.
Expenses that will be subject to the deductible will include lab work, diagnostic tests, surgical procedures, medication, specialty services, visiting specialists, and more. The amount of the deductible will be inversely proportionate to the monthly or annual premium paid for the health insurance policy - in other words, the higher the deductible, the lower the premium costs, and vice versa. Either way, it is very important to factor in unavoidable health coverage costs due to the presence of the deductible.
Co-insurance is a term that refers to the out of pocket cost the consumer must bear in order to use their insurance benefits. Co-insurance will vary depending on the type of services accessed, but generally falls into what is called an "80/20" or "70/30" ratio, meaning that the insurance provider will pick up eighty or seventy percent of the costs, leaving the consumer to pick up the costs that remain. There is often a set co-insurance amount, usually twenty or twenty-five dollars, but this amount can be less or more as well, that the consumer must pay when visiting any medical provider. Then the percentages apply to services beyond an office visit. So while having health insurance coverage significantly reduces costs, deductibles and co-insurance ensure that the consumer must still bear some costs.
