Understanding the Basics of Your Insurance Policy

Posted on July 7, 2017 · Posted in Parent Tips

Most insurance policies include something called cost-sharing. It keeps premiums down and ensures members receive necessary, appropriate, and cost-effective healthcare.

After your family’s premiums are paid each month, there is still a “member responsibility” to be paid for each visit to a provider/doctor.

Cost-sharing terms to know include:

Copay*: The same, flat dollar amount paid by the member/family listed on the insurance policy at each office visit.

Example: If a child has both speech therapy and occupational therapy in a day, a copay is paid for both services since two separate therapists work with the child.

Deductible: A fixed dollar amount paid by the member before the insurance company will start to pay a portion of the insurance benefits.

Example: Occupational therapy is a benefit of the member’s insurance policy, although the member will pay the cost for all services until they have paid out their deductible amount. Deductibles range anywhere from $200 – thousands of dollars depending on the insurance policy.

Coinsurance*: After the deductible is satisfied, the member pays a percentage of the cost of the services they obtained, generally anywhere from 10% – 40%.

Out-of-Pocket Maximum: The amount of money a family will pay out-of-pocket for services until insurance will cover the rest 100%.

Example: A family will meet their deductible of $2500, then start paying their coinsurance portion. They then pay coinsurance until the amount they have paid reaches their out-of-pocket (OOP) maximum of $3000.

(Often, deductible and OOP Maximum are the same amount, so a family would not have any out-of-pocket expense for the rest of their policy’s duration after this dollar amount is met. Calendar year policies are the most common.)

*Sometimes people use copay and coinsurance interchangeably, but they are not the same term. Copay refers to fixed dollar amount. Coinsurance refers to percentage of payment and usually follows a deductible.

For each service provided to a member, your insurance will send an “Explanation of Benefits” letter to your home or online account. It will show you what the provider billed (claim amount), what the insurance company’s payment responsibility is, and what your member responsibility is based on your policy’s cost-sharing structure.

We hope this information is helpful for you. If you have any further questions, please contact your insurance company’s member services department. They will be able to check whether services are covered, what your member responsibility is for each service, and other general questions based on your specific policy.

You may also contact Megan Brunk, Director of Operations, at 515-987-8835.