The health insurance industry (XLV) offers a wide range of healthcare plans with varied payment options as per insurance enrollees’ requirements.
The deductible is the amount of money that a member has to pay in a calendar year before the insurance company begins to share their medical expenses. For example, with a $4,000 bill, a deductible of $2,000 implies that the member first pays $2,000 and then the insurance company shares the expenses for the remaining $2,000 of the bill. The deductible amount depends on whether the member uses services from healthcare providers that the insurance plan selected. If not, there will be a higher deductible required.
Copayment is the amount that members pay when they use a particular type of health service and the insurance company pays the remaining bill. For the above example, for the remaining $2,000 of the bill, the member could pay $500 while the insurance company payed the remaining $1,500.
In coinsurance, the member pays a fixed percentage of the cost for a health service and the insurance company pays the rest of the bill. For the above example, the member could pay 20% of the healthcare bill, which is $400. The remaining 80% or $1,600 could be paid by the insurance company.
Once the member’s total payment reaches the out-of-pocket limit, the insurance company pays the remaining bill.