Understanding deductibles, coinsurances, copays, and out-of-pocket maximums

Deductible

A deductible is a fixed cost that the patient pays before the insurance company begins to pay. For example, if a patient has a $1,000 deductible, they will pay $1,000 before their insurance starts to pay for the healthcare service.

Coinsurance

After the patient pays their full deductible, they begin paying their coinsurance. Coinsurance is usually a percentage of the amount charged per service. For example, after the patient pays their full $1,000 deductible, they begin paying 25% for a specific service and their insurance company pays the remaining 75%.

Copay

A copay is a fixed amount a patient pays per service or appointment. The copay is usually paid upfront before the deductible and coinsurance. For example, a patient pays a $50 copayment before receiving services. It is important to note that the copay doesn’t count toward the deductible, but does count toward their out-of-pocket maximum.

Out-of-pocket maximum

The out-of-pocket maximum is the most a patient will pay for services. The insurance company pays 100% for the services after a patient spends a fixed accumulated total amount on their deductibles, coinsurances, and copays for the year. For example, a patient needs a service that costs $6,000, and they have an out-of-pocket maximum of $5,000. The patient pays their $1,000 deductible, $50 copay, and their 25% coinsurance until they hit their $5,000 limit. After that, their insurance company fits the bill.

Verifying and understanding health insurance is a confusing mess for both the healthcare provider and the patient. Hey Healthcare is a project that attempts to fix the user experience of health insurance through technology. Hey Healthcare enables healthcare providers to look up patient insurance coverage including coinsurance, copay, deductible, etc. in an easy to use, HIPAA compliant app.