Your Plan’s Expenses: Deductible or Copay?
Deductibles, copays, coinsurance—we’ve all heard these terms ad nauseam. But how can you know how much you’ll need to pay for your plan in addition to its monthly cost? And which term is which? What goes to the deductible, and what goes to copay? The Insurance People are here to make it easier to understand your health insurance plan’s expenses. For reference, we’ll talk about PPOs and HMOs and the expenses within these types of plans.
A PPO plan allows you to select the doctors you want to go to and the hospital group you prefer. As long as you stay in network, you have the opportunity to utilize your benefits either with a copay or on a deductible and coinsurance. Items that utilize copay are going to the doctor or a specialist, going to urgent care, and getting prescription medication. If you undergo a procedure or surgery, it will be billed towards the deductible and coinsurance. Copay and deductible are mutually exclusive terms. Deductible transactions are not copay transactions. Additionally, coinsurance is the designated percentage you will pay towards your visits, procedures, etc. once your deductible is met.
Conversely, with an HMO, basically everything you do requires a copay. Because an HMO plan limits where you can go, you pick one doctor and that one doctor refers you to all the other doctors you might need. Also, if you stay within this referral network, you save money when you utilize it. Whether you’re having a surgery or procedure, visiting a doctor or specialist, everything on an HMO requires a copay. As a result, with every copay you make, it works towards your out of pocket maximum and then once it’s met, you stop paying copays for that year.
To break it down, the deductible is essentially the money that you have to pay up front to satisfy your plan’s maximum out of pocket cost. Once that deductible number is met, then you start working towards your out of pocket maximum. Deductibles and copays are never connected—they are separate costs. If it meets your deductible, it’s not a copay. If it’s a copay, it’s not going towards your deductible. However, copays, deductibles, and coinsurance all pay into your plan’s maximum out of pocket cost. And when you reach your plan’s maximum out of pocket, you have met the total cost of your plan.
Have questions about your plan’s expenses? Ask The Insurance People a question here.
