Group Health Insurance
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06-21-2009 by Colleen King
Here is another term in Health Insurance, both Group Health Insurance and Individual Health Insurance that people don’t always understand. I would have posted this sooner, but it’s been a busy month!
(“Help, I don’t understand!”)
Coinsurance might be easier read with a hyphen; co-insurance. This is one of the three main questions people should ask (in my opinion) in looking at a health insurance plan. You have the deductible, the out of pocket maximum and then that step in the middle, co-insurance. ‘What’s my co-pay’ is a good one too, but not as important as the ‘big figure’ numbers.
Generally the deductible is what you pay before the coverage kicks in. If you have something big hit, the out of pocket maximum, or co-insurance maximum is the part that keeps you from going broke. Once you hit your out of pocket maximum, that is generally all you pay on eligible health care expenses for the remainder of the calendar except for office visit co-pays and prescription drug co-pays, depending on your plan. The key word here being, eligible.
How do you reach your out of pocket maximum? That’s where co-insurance comes in. Once you hit your deductible, then the carrier starts to pay. Co-insurance is what percentage of eligible charges they pay and what percentage you pay. 80/20 used to be pretty common, with the carrier paying the 80% part. Now we are seeing all kinds of splits. There are a few (very few) 90/10 plans, but they are really expensive. In the individual market we mainly have 70/30 plans in California, but now there are 60/40 and even 50/50 plans.
Some people balk at a 60/40 or 50/50 plan–what’s the point in having insurance, they ask. That brings me back to the out of pocket maximum. You may be paying 30, 40 or 50% of the bill, but once you hit the out of pocket maximum the carrier pretty much comes into play at 100%. It’s a matter of how soon do you want the carrier to come into play.
All plans are not created equal. The more you want from a plan, the more it will cost. If you want more coverage sooner, it will cost you more. In reality, you’ll either pay in advance (premium) or you’ll pay at the time you need help (medical bills). So if you can handle more of the expense of health care, buy a plan with a lower premium, especially if you’re basically healthy. There’s no rebate for low utilization if you have a ‘healthy’ year as opposed to a ‘sick’ year.