Conditions and important concepts of insurance

     Out-of-pocket: The terms “out-of-pocket” and/or “copayment” refer to the part of your medical expenses that you must pay when you actually receive medical care.  The monthly premium you pay for care is separate from these costs.

     Annual Deductible: The annual deductible is the amount you pay each year before the insurance company begins to pay its share of the cost.  If the deductible is $2,000, you are responsible for paying the first $2,000 in health care benefits you receive each year, and then the insurance company begins to pay its share.

     Copayment (or “Copayment”): A Copayment is a fixed amount you pay each time you receive Care when that Care is subject to a Copayment.  For example, you can pay $30 to see a doctor, and then your insurance will cover the rest.  Plans with higher premiums tend to have lower copays, and vice versa.  Plans without copays generally use other cost-sharing methods.

     Coinsurance: Coinsurance is a percentage of the cost of your medical care.  For an MRI that costs $1,000, you may pay 20% ($200).  Your insurance company will cover the remaining 80% ($800).  Higher premium plans generally include less coinsurance.

     Annual spend maximum: The annual spend maximum is the highest proportion of costs you have to bear in a year.  This is the sum of your deductibles, copayments, and coinsurance (excluding your premiums).  Once you reach that limit, the insurance company pays 100% of your covered costs for the rest of the plan year.  Most participants never reach the spending limit.  However, this can happen when extensive and expensive treatment is required as a result of an accident or serious illness.  Higher bonus plans often have lower withdrawal limits.

     What “covered benefit” means: The terms “covered benefit” and “benefit benefit” are commonly used in the insurance industry, but can be confusing.  “Benefit” generally means a health care service that is included (ie, “covered”) in the premium of a particular health plan and paid for by or on behalf of the Registered Patient.  “Reimbursed” means that the insurance company reimburses a portion of the eligible cost of the medical service.  This does not mean that the performance is 100% paid.

     For example, a copay may apply to a plan where “urgent care” is “covered.”  Copayment as patient contribution.  If the copay is $100, the patient must pay that amount (usually at the time of service), and then insurance “covers” the rest of the reimbursable costs of the emergency service.

     In some cases, the insurance company may not pay anything for the “covered benefit.”  For example, if the patient has not yet met the $1,000 annual deductible and the cost of the covered medical service is $400, the patient must pay that $400 (often at the time of service).  What makes this service “covered” is that the cost is factored into the annual deductible, so the patient would only have to pay $600 for future services before the insurance company pays.  your part

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