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Understanding Your
"MAX" Out of Pocket Expense
Deductible + Co-Insurance
Coinsurance is simply a share in the cost between you and your insurance carrier up to a specified amount called a "Stop / Loss", after which point, your insurance carrier then begins paying 100% of your medical costs.
Insurance carriers will offer various options of In-Network and Out-of-Network Co-insurance amounts.
Here are some examples:
- 100% In-Network
50/50 Out-of-Network
- 90/10 In-Network
70/30 Out-of-Network
- 80/20 In-Network
60/40 Out-of-Network
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- 70/30 In-Network
50/50 Out-of Network
- 50/50 In-Network
50/50 Out-of Network
If you have 100% Co-Insurance,
your Max-Out-of-Pocket is only
the deductible you choose.
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The Co-Insurance amount is not necessarily the most important piece of this Max-Out-out Pocket puzzle; however, the Stop / Loss amount is.
A Stop / Loss is the amount up to which you agree to share the cost of the expenses between you and the insurance carrier.
For example, have you ever heard anyone say, "I have the old major medical 80/20."
You may have 80/20 Co-Insurance for your plan design; but you need to be asking 80/20 of what?
That "what" is called the "Stop / Loss" amount and could end up being more money out of your pocket than you ever anticipated if you don't understand it.
Let's say you have a plan design with an 80/20 of $5,000. What does that mean exactly?
80/20 is the Co-Insurance or the amount that you agreed to share in the cost with the insurance company. The insurance company will pay the 80% and you will pay 20% up to the specified amount of the Stop / Loss.
The $5,000 is the Stop Loss amount. This means for the first $5,000 of In-Network charges, the insurance company is going to pay 80% and you've agreed to pay 20% of that $5,000. Once you've met you're 20% of that first $5,000 expenses, then the insurance company is responsible for 100% of your medical cost thereafter up to the Lifetime Maximum for that policy.
But... in order to calculate your're "TRUE" Max-Out-of-Pocket expense; let's not forget to include your deductible.
Keep in mind that over 90% of people with major medical benefits never have enough annual medical expenses to satisfy their share of a co-insurance amount. Co-Insurance will most likely be met when someone has to be admitted to a hospital.
Here's the scenario
The insurance carrier providing you with a plan design of:
$1,000 Deductible
80/20 Coinsurance up to a Stop / Loss amount of $5,000 In-Network
60/40 Coinsurance up to a Stop / Loss amount of $10,000 Out-of-Network
The math would look like this:
Other Scenarios:
(the point being... there are lot of ways to achieve the same result.)
Please be aware that some insurance carriers may NOT tell you what the "Stop / Loss" amount is. Instead they disguise it by only telling you what they will refer to as the "Out-of-Pocket Expense" for
In-Network or Out-of-Network.
For example they may print it as:
$1,000 Deductible
80/20 Co-Insurance
$1500 Out-of-Pocket Expense
This would be 80/20 of $7,500 (20% of $7500) = $1,500 Out of Pocket (Your Pocket)
Your deductible would be $1,000 Out of Pocket
$2,500 MAX Out-of-Pocket
One more thing...
Always read the fine print to find out the maximum number of Deductibles and Co-Insurance amounts that apply for each family; some carriers are 2 or 3 times the Deductible and Co-Insurance amounts. Of course, if you're looking at a High Deductible Health plan accompanied by a Health Savings Account (HSA), then it's usually only 1 x the Deductible and Co-Insurance amount per family.
If you have any questions about your MAX Out-of-Pocket, please Contact Us; we are more than happy to be of service to you.
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