| How
Health Insurance Plan Deductibles Work! |
| Choose
from the terms below to get detailed information on how each of
these benefit options work. |
EGS would rather it's clients be informed
buyers than to simply sell insurance and added benefits that the client
may not need. Therefore we are presenting this information as a
helpful guide for you to make an informed decision on which plan to buy
and which benefits to include. We are not attempting to persuade you to
either include or exclude certain benefits from your health insurance
plans. We simply want you to make the right decision for you and be
happy with your selection. This guide is presented in general terms
and attempts to explain how health insurance plans work. Not all
plans work equally nor does this imply that this information is valid in
all states or situations. It does however, give the general workings
of many health insurance plans and how deductibles, coinsurance, and
copays function.
Deductible
The term deductible is one
that many insured's have heard time and time over. In this article,
we will attempt to explain how the deductible works within the policy and
its relationship to other plan features. Years ago, and still
available today, there were few or no PPOs or HMOs. Health insurance
plans had a deductible amount that had to be paid by the insured before
the insurance company paid anything. The deductible is still much
like what it has always been with the exception of added benefits such as Copays
and Wellness Benefits Riders. When you hear the term deductible,
this is the amount that must be paid by the insured.
For example let's use a plan with a $500
deductible and a Copay of $20 for doctor office visits. For figure's
sake, let also assume that you just started your plan and have not met the
deductible yet. You just visited the doctor for the flu and he also
ran some blood tests and performed an x-ray. In this instance we
will also assume that $90 is the doctor's charge for office visits.
The $20 Copay benefit would take care of the $90 office visit and you
would only pay the $20. The insurance company would pay the
remaining $70. We will guess at a price for the x-ray and lab work
at a price of $400. These charges would be billed separately from
the doctor office copay/visit. In this case, with you not having met
any of your deductible for the year, the remaining $400 would be payable
by you to the physicians and facilities that performed them.
Example 1.1
| $90
Doctor Office Visit |
You
Pay $20 |
Insurance
Co. Pays $70 |
|
| $400
Lab & X-Ray Chg. |
You
Pay $400 |
Insurance
Co. Pays $0 |
|
Now to carry this one step forward and to
further explain this seemingly one sided arrangement, let's take another
medical bill that you incur later in the year. Well it's that time
of year again and Strep is going around at your office. You go to
the doctor and are charged another $90 doctor office charge and of course
a Strep test at $80 and also gives you a Penicillin shot. The shot
will likely be billed as a surgical procedure for the actual act of
sticking you with the needle at a charge of $75. Please remember
that these amounts are just made up for the sake of the example.
This time the $90 is once again covered by
the $20 copay and the insurance company pays the balance. Now the
$80 Strep test and the $75 injection total $155. You have met $400
of your $500 deductible already earlier this year. You would pay the
remaining $100 of your deductible against the $155 in charges, leaving you
with a remaining balance of $55 to be paid by the insurance company.
Sounds simple enough right? There is more. The remaining $55
would be carried over to the Co-Insurance
level of the plan. See example 1.2 below. We
will deal with the Co-Insurance term later in this article.
Example 1.2
| $90
Doctor Office Visit |
You
Pay $20 |
Insurance
Co. Pays $70 |
|
| $155
Lab and Injection |
You
Pay $100 |
Insurance
Co. Pays at Co-insurance level. |
|
Now your deductible has been met for the
year and everything else will be paid according to the Co-Insurance level
you chose when you bought the policy. Typically the copays you made
to the doctors office will not go towards satisfying your deductible.
Remember, the insurance company has already paid on these portions of the
claims.
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