How Major Medical Insurance Pays.

Terms to know when shopping for health insurance.

Deductible

The insured agrees to pay 100% of medical bills up to this

amount before the insurance company has any

responsibilities.

Co-Insurance

A co-insurance requiresthe insured to share a percentage of the

costs of covered services after paying 100% of a deductible if present. It is often

expressed as a ratio with the insurance company paying the greater percent.

A co-insurance can be expressed as 80:20. This is saying that the insurance company willpay 80% of medical costs after the deductiblehas been paid by the insured. The insured willpay the remaining 20%.

90:10, 80:20, 70:30, 60:40 and 50:50 are commonco-insurance plans. The lower the first number,the lower premium is required.

Maximum Out of Pocket

Sometimes called an OOP, this is a limit to the amount of money the insured is

required to pay for medical care before the insurance company pays 100% of

medical costs for the rest of the policy term.

Co-Pay

Typically, a nominal payment owed to a medical provider for

routine treatment or consultation. It is not subject to

the policy deductible. While they pay for medical treatment

without regard to the policy’s deductible or co-insurance, they do not count towards fulfillment

of deductible or co-insurance requirements.

The amount paid in the form of a co-pay do not pay for the

entire treatment or consultation. The doctor will bill the

insurance company for more money.

High Deductible Health Plan

Also known as Consumer Driven Plans (CDP), High Deductible Health Plans (HDHP) are plans with a minimum deductible of $1,200 for self-

only coverage and $2,400 for self-and-family coverage. They are often used in combination with tax favored Health Savings Accounts (HSA).

They are used primarily to protect the insured from exorbitantly crippling medical bills in the event of an accident, disease or surgery.

Health Spending Account

Used in combination with a High Deductible Health Plan the Health Spending Account is a tax favored savings account used to pay for

medical care that is not paid for with health insurance.

Details about HSA plan can be found in IRS publication 969.

The Insurance Barn

Tim Barnes, CLURichmond, Texaswww.theinsurancebarn.com(832) 767-8059