jb32 wrote:
Here's my interpretation on health insurance, However, I am by no means an expert on this.
Deductible - what you have to pay out-of-pocket before insurance kicks in, usually applies to prescriptions, non-standard procedures (i.e. not a doctor's visit).
Copayment - fee you pay at all doctor's offices, hospitals, wellness centers, etc. before you get to see a doctor (the reason this exists is to prevent people from thinking all medical services are free, you might not go to the doctor for a cold if you have to pay $30. Keeps costs down).
Coinsurance - percentage you have to pay up to an out of pocket maximum for certain services. Let's say you have your pancreas removed. It costs $20,000. Your out of pocket maximum is $3,000. You pay $3,000 for that surgery.
Let's say you have 80% coinsurance (where the insurance company pays 80% up to your out of pocket maximum and then covers 100% above that amount). Same surgery as above costs $10,000. I believe you then owe $1,000 for the deductible, and then 20% of the remaining cost or $1,800 with a total bill of $2,800. I may be wrong on this part, though.
I believe there is also a prescription drug benefit that pays 80% of the costs for non-generics once your deductible has been met. I believe with some plans generic drugs are like $10. It just depends on the plan and insurance.
That's a pretty accurate description, with a few minor modifications:
Deductible - this is the amount you pay out of pocket before the insurance starts to pay anything. So if you have a $500 deductible, you pay the full price for medical care until you spend $500. After that, insurance starts to pay a portion and you pay the copayment/coinsurance amount. If in any year the amounts you paid for deductible and copays/coinsurance reach your out-of-pocket limit, the insurance pays 100% of reasonable and customary charges. This is then complicated by plans that say that certain services (e.g. annual physicals) are not subject to a deductible, in which case insurance will pay the partial or full amount regardless of how much you've spent that year.
Copayments and coinsurance are essentially the same thing - a mechanism for sharing costs of health care between the patient and the insurance company or other payer. The difference is that copayments are expressed as a $ figure while coinsurance is expressed as a % of the cost. Again, it can be complicated because the same plan may specify copayments for some services and coinsurance for others. Last, most plans have higher copayments/coinsurance rates for out-of-network care or for things they'd like you not to do (e.g. buying brand-name drugs when generics are available).
One other point to keep in mind, one of the other benefits of health insurance beyond the above is that most health plans have negotiated lower rates for services and prescriptions with their provider network. So even if you never spend more than your deductible, having the insurance will let you pay less for care than if you did not have any insurance because of these negotiated rates.
So basically if you're in good health, high deductible plans are a great way to go and save money on insurance costs. You don't have to paying for coverage on care that you rarely if ever use, but still limit your financial exposure if you come down with a major illness and require hospitalization. I don't know if I'd recommend a high deductible plan for a couple with kids, since I think the frequency with which kids go to the doctor may make the high deductible plans more expensive.