Understanding how co-insurance plans work.
Rising health care costs have led insurance carriers to offer additional features on health insurance plans that serve to reduce monthly premiums. The concept of co-insurance is one technique that can dramatically lower the price of , but it is not without risk. can be complicated, and require additional effort to maintain accurate record-keeping.
Co-Insurance Definition
Co-insurance has become the common term used to identify plans that require the covered member to share treatment costs with the carrier, and is actually a shortened form of the term "cooperative insurance." Payment for services other than ordinary and expected annual physicals will be split between the covered members and the insurance company.
Purpose
The primary purpose of co-insurance plans is to reduce the member's monthly insurance premium. By shifting a portion of treatment costs to the patient, insurance companies spend less money and can charge lower premiums for those plans. Additionally, the instances of unnecessary office visits and testing procedures are typically lower when patients must pay for some of their own care, leaving doctors more time to address legitimate needs.
Your Deductible
Most co-insurance plans require members to pay a flat fee, or deductible, toward treatment costs before the carrier will consider paying a portion of the remaining balance. Until the deductible has been met, payment for any medical services is entirely the responsibility of the patient. Once this pre-defined amount has been fulfilled, any additional balance is split between the member and the insurance company.
Cost Calculations
Balances remaining after the deductible has been paid are shared between the member and the carrier. The insurance company usually pays the bulk of the bill, and the patient is typically responsible for 10 to 30 percent of any leftover invoices.
Maximum Out-of-Pocket
Safeguards exist in all co-insurance plans to protect members against the dangers of insurmountable medical bills. Co-insurance policies have a built in stop-loss feature called "Maximum Out-of-Pocket," or MOOP, that prevents patients from being obligated to pay excessive amounts toward their care. The MOOP is an aggregate figure comprised of the annual deductible and all co-insurance portions paid by the member, but does not typically include prescription costs and office co-pays. Once members have spent an amount equal to the MOOP, all remaining treatment costs are paid in full by the insurance carrier. Every co-insurance policy has a different MOOP, but the average figure is between $1,000 and $10,000.
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