In health insurance, the term “Co-Insurance” is used to determine what part of medical expenses the health insurance company pays and what part you pay. This “Co-Insurance” is usually expressed in a percentage, like 80/20. In this situation, the insurance company will pay 80% of approved medical expenses (after deductible) and you will pay 20%, up to your maximum out-of-pocket expenses expressed in the health insurance policy.
Understanding “Co-Insurance” Is An Important Step In Understanding Your Health Insurance PolicyLet’s look at an example: We are going to assume that your health insurance policy provides - 80/20 Co-Insurance, $500 Deductible, and a maximum Out-of-Pocket of $3,500. You have just been discharged from the hospital and have accumulated $12,000 in approved medical expenses. |
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Approved Medical Expenses - $ 12,000.00
You Pay Your Deductible - $ 500.00
Remaining Approved Expenses - $ 11,500.00
You Pay 20% - $ 2,300.00
Remaining Expenses - $ 9,200.00
Insurance Plan Pays 80% - $ 9,200.00
What happens if you should be hospitalized again in the same year?
First of all, you have already satisfied your health insurance plan’s annual deductible, at least for yourself. In a family situation, you may be required to satisfy two or more deductibles in a year.
Secondly, you have met $ 2,800.00 of your maximum out-of-pocket expenses. In this example, we said that the maximum out-of-pocket was $ 3,500.00, so the most you would pay of these approved medical expenses would be $ 700.00.
In most health insurance plans, once you have met your annual deductible and your maximum out-of-pocket expenses, the plan would then pay 100% of approved medical expenses, up to your lifetime maximum stated in the health insurance policy.
This is an oversimplified example, but I just wanted to give you some idea how health insurance plans work.
- Do you understand how a health insurance “co-payment” works?
- Do you know your health insurance plan’s “lifetime maximum”?
- Do you know how health insurance companies deal with “pre-existing” health conditions?
- Do you understand that your health insurance premium could be lowered by increasing your “deductible”?
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Technorati Tags: health insurance, health insurance plans, co-insurance, medical expenses
February 1, 2008





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