“How much does it cost to visit a doctor?”
When you’re selling health insurance, this is one of the primary questions you’ll hear from your clients. Most often, they’ll expect you to tell them the amount of their office visit copay, and perhaps their copay for a specialist visit. Copay-style health insurance is common, comfortable for consumers – and very often the wrong policy for your client’s needs. To figure out why, let’s take a closer look at how copay-style health insurance works, then compare it to a HDHP (high-deductible health insurance plan) to see how they stack up against one another. First things first – what “moving parts” can we find in a typical copay-style health insurance plan?
- Copay – The copay is a set dollar amount an insured will pay to visit a physician (not a hospital or ER). This is usually in the $25 – $50 range per visit, and will be paid every time your client has a doctor’s office visit – even after the deductible is met. Some plans charge one copay price for general practitioners and a higher copay for specialists, while others might offer only a handful of copays before hitting the insured with the full cost of the office visit. The plan may also offer a prescription copay, rather than forcing the insured to pay the full cost of their prescription drugs (up to the deductible). Remember, though, you will pay this copay even after meeting your deductible.
- Deductible – This is the dollar amount of medical expenses (other than services covered by copays) that the insured will have to pay before the insurance company starts helping to pick up the tab. For instance, if you have a $2500 deductible and get a hospital bill for $5000, the insured will pay that first $2500. From there, the plan’s benefits kick in and the coinsurance starts to help shoulder the cost.
- Coinsurance – The “share of cost” between the insured and the insurance company that takes effect after the deductible is reached. Let’s made an example, sticking with our hypothetical $5000 bill above: the insured had to pay the first $2500 towards the deductible, leaving another $2500 to account for on the bill. Let’s say that this plan has a 20% coinsurance, or share of cost – the insured would pay $500 of the remaining balance (20% of $2500), and the insurance company would pay the rest. This arrangement would continue until the insured hit their out-of-pocket limit.
- Out-Of-Pocket Limit – The total amount a client will pay in a year on medical expenses (those not covered by a copay) before the insurance company starts paying 100% of covered medical bills. To finish our hypothetical example with the $5000 medical bill: the insured has paid $2500 (deductible), plus another $500 (coinsurance of 20% of the remaining cost). That means $3000 has been paid in total. If the plan’s out-of-pocket is, say, $4000, then the insured has another $1000 to pay before they’re covered at 100% for the rest of the year. Since the insured here has already met their medical deductible and they’re only paying 20% of their costs, this means it’d take another $5000 in medical bills (where the insured actually pays $1000, 20% of the total) before the insurance company begins paying 100%. Remember – even once you’ve met your out-of-pocket and the insurance company is paying 100%, you still owe your copays!
Now we’ve got the basic parts of copay style insurance down, and next time, we’ll launch right into what a high deductible health plan is, and why your clients may need one.