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Understanding How Insurance Costs Work Together

Here are a few examples of how deductibles, coinsurance and out-of-pocket maximum limits apply when you get care.

 
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example 1

Deductibles, Coinsurance and Out-of-Pocket Maximums

Your health plan has a:

  • $4,000 deductible
  • 25% coinsurance
  • Out-of-pocket maximum of $5,000

This means:

  • You must pay $4,000 toward your medical costs before your plan begins to cover costs.
  • After you pay the $4,000 deductible, your plan covers 75% of the costs, and you pay the other 25%.
  • When you've paid $5,000 out of your pocket toward your medical costs, your plan covers 100% of your costs until your "plan year" renews. A plan is good for one year.

When the next plan year begins, your deductible and coinsurance reset. You are once again responsible for the $4,000 deductible and 25% coinsurance.

Example 2

Coinsurance After You've Met Your Deductible

Let's say you fracture your hand while playing sports and you need an X-ray. If you've already met your annual $4,000 deductible, your coinsurance goes into effect. In this example, that means that your plan now pays for 75% of your benefits while you pay the other 25%.

Here's a break down of those costs:

  • The X-ray for your hand costs $200.
  • Your plan covers 75%, which is $150.

The amount you pay out-of-pocket cost, or your coinsurance, is $50.

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Example 3

Maximum Limits

Your health plan sets a maximum limit for certain tests, procedures and medical services. This means it will cover up to a certain amount for these services. The limits help lower costs for all members by keeping rates fair and reasonable.

Let's say your doctor charges more for the hand X-ray.

  • Your health plan covers a maximum of $200 for an X-ray.
  • Your doctor charges $250.

You may have to pay the $50 difference.