Deductibles, co-insurance, and co-payments are different ways that you and your plan share the cost when you receive medical care. Learn more. The specifics of each of these cost sharing methods varies from plan to plan, but the following gives a general overview of how they work. See your plan document for specific information.
You pay a deductible each year (or policy period)
With your car or house insurance, when you have a claim you pay the first few (or several) hundred dollars and then your plan pays. Those deductibles usually apply every time you have a claim. Most medical plans have a deductible too. But, medical plan deductibles apply every year (or policy period).
Once you pay the amount of your deductible for health care services, (commonly referred to as “meeting your deductible”), your plan will cover a portion of the cost of your care.
Your policy period is the calendar year, your deductible is $500, and your co-insurance is 80% / 20%. In January and February, you see your doctor a few times for a knee problem. The visits add up to $500. You pay the full cost for these visits. In March, you visit the doctor again and the cost is $100. You’ve met your deductible, so the plan pays $80 and you get a bill for $20.
The amount of your deductible has a big impact on how much you will pay in premiums. Learn more.
Co-insurance is based on the amount your plan will pay
Insurance companies look at the usual rates for medical care in an area, along with negotiating discounted rates with in-network providers to determine what the plan will pay. Co-insurance is based on a percentage of the amount the plan has settled on (not necessarily what you were billed).
You’ve met your deductible for the year and your co-insurance is 80% / 20%. You visit an in-network doctor and the cost is $100. The plan pays 80% of the $100 ($80). You are responsible for 20% co-insurance ($20).
In-network providers agree to accept the plan’s rates. Learn more.
Co-payments are set by your plan
Co-payments are a flat dollar amount that may vary by the type of service (for example, your co-payment for a visit to a specialist may be higher than your co-payment for a visit to a primary care doctor) but they aren’t affected by how much the provider bills your plan. You can check your plan booklet or insurance card for the co-payments required by your plan. For example, your co-payment for an in-network primary care visit may be $20. If the visit is not subject to the deductible or coinsurance, that’s all you’ll pay.
You will usually pay your co-payment at the time you receive services or care. Learn more.
Sometimes, more than one of these cost-sharing features applies. Emergency room care is sometimes subject to both a co-payment and co-insurance. Let’s say you go to the emergency room and the billed amount is $1,000. You plan has a $250 co-payment and 80% / 20% co-insurance for emergency room care. First, you pay $250. The plan pays 80% of the remaining $750 which is$600 and you pay 20% or $150. Your total cost is $400 ($250 co-pay plus $150 co-insurance).