The following are terms utilized by the medical insurance industry concerning your payment responsibility. These are general definitions. Your insurance company may have different ones:
Coinsurance - A form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any, was paid.
♦ Once any deductible amount and coinsurance are paid, the insurer is responsible for the rest of the reimbursement for covered benefits up to allowed charges: the individual could also be responsible for any charges in excess of what the insurer determines to be “usual, customary and reasonable”.
♦ Coinsurance rates may differ if services are received from an approved provider (i.e., a provider with whom the insurer has a contract or an agreement specifying payment levels and other contract requirements) or if received by providers not on the approved list.
♦ In addition to overall coinsurance rates, rates may also differ for different types of services.
Copayment - A form of medical cost sharing in a health insurance plan that requires an insured person to pay a fixed dollar amount when a medical service is received. The insurer is responsible for the rest of the reimbursement.
♦ There may be separate copayments for different services.
♦ Some plans require that a deductible first be met for some specific services before a copayment applies.
Deductible - A fixed dollar amount during the benefit period - usually a year - that an insured person pays before the insurer starts to make payments for covered medical services. Plans may have both per individual and family deductibles.
♦ Some plans may have separate deductibles for specific services. For example, a plan may have a hospitalization deductible per admission.
♦ Deductibles may differ if services are received from an approved provider or if received from providers not on the approved list.
Maximum plan dollar limit - The maximum amount payable by the insurer for covered expenses for the insured and each covered dependent while covered under the health plan.
♦ Plans can have a yearly and/or a lifetime maximum dollar limit.
Maximum out-of-pocket expense - The maximum dollar amount a group member is required to pay out of pocket during a year. Until this maximum is met, the plan and group member shares in the cost of covered expenses. After the maximum is reached, the insurance carrier pays all covered expenses, often up to a lifetime maximum.