by Chris Woolstenhulme, QCC, CMCS, CPC, CMRS
May 11th, 2015
Co-pay versus co-insurance are easy to mix up and they are two entirely different forms of cost sharing. When you reach your deductible, you must pay a percentage of the remaining costs - this is the co-insurance amount.
Each health insurance plan establishes these fees up front - they are often printed on your health insurance card.
Not all payments count toward your deductible. Depending on your plan, some services only require a co-pay and those co-pays count toward your out-of-pocket maximum.
Don't Confuse Co-Payment and Co-Insurance
When you've met your deductible, you'll have to pay co-insurance (usually 20 percent of the provider's charge) until you reach your out-of-pocket maximum. After that, the insurance company will pay for all covered services to the policy maximum for the remainder of the year.
Q. Do co-pays, co-insurance, and deductible payments count toward my out-of-pocket maximum?
A. In most cases, yes. However, there may be certain exceptions, such as payments for infertility services, which typically do not count toward the out-of-pocket maximum.
The amount you pay at check-in will vary depending on the services you’re scheduled to receive. Until you reach your deductible, you’ll pay the full charges for most services. After you reach your deductible, the amount you owe will usually be much less - a co-pay or co-insurance for most services, depending on your plan details. In most cases, what you pay when you check in will only cover part of what you owe for your scheduled services. You'll be billed later for any balance you owe, especially if you receive additional services during your visit that weren't scheduled.
Let’s say you have a policy with 30% co-insurance. That means the insurance company will pay 70% of the bill after your deductible has been met and you pay the remaining 30%. But you won’t have to pay that 30% forever. You pay until you reach your out-of-pocket maximum - perhaps $5,000, depending on your plan. Then, your insurance will cover the rest of qualifying medical expenses for that calendar year.
Example: You have a $100,000 hospital bill, and a plan with a $1,500 annual deductible and 30% in-network coinsurance. You pay the $1,500 deductible plus 30% coinsurance until you reach your $5,000 annual out-of-pocket maximum.
You may also have a plan that allows you the first few office visits with a co-pay, and then your annual deductible and co-insurance will apply. With these plans, you will not be charged co-pays or co-insurance for in-network preventive services like annual checkups, mammograms and colonoscopies.
Patients are not charged both about 99% of the time. Keep in mind on most plans, co-pays do not count toward your deductible.
Collecting both is an unusual double form of cost sharing.
A co-pay is a fixed amount you pay for a health care service, usually when you receive the service. The amount can vary based on the type of service. You may also have a co-pay when you get a prescription filled. This is your initial payment for service, no matter what your visit is for.
Co-insurance is your share of the costs of a health care service. It's usually figured as a percentage of the amount allowed to be charged for services. You start paying co-insurance after you've paid your plan's deductible.
A deductible is the amount you pay for health care services before your health insurance begins to pay. If you are not covered by a co-pay, you are responsible for 100% of the cost, until you reach your deductible.
The basics about annual health deductibles:
- Hospitalization, surgery and procedures are typically applied to your deductible.
- Lab tests, MRIs, CAT scans, surgical costs, anesthesia, physical therapy, medical devices usually count toward your deductible.
- Mental health care, chiropractic care and other services may also count toward your deductible.
- Premiums are not applied toward the deductible. Deductibles are different for individuals and families. Deductibles are much lower if you see in-network versus out-of-network (outside the network) doctors; if you go out-of-network, you will have an out-of-network deductible which is separate from the in-network deductible.
Most health insurance companies count co-insurance toward your out-of-pocket maximum, but some don’t count co-pays toward that out-of-pocket maximum. A health plan’s benefit summary should tell you if it does or doesn’t credit your co-pays towards your out-of-pocket maximum.
You don’t usually have to pay both a co-pay and co-insurance on the same healthcare service. For example, it would be unusual to pay a $40 co-pay for a doctor’s office visit, and then also have to pay a co-insurance of 20% of the cost on that same visit. However, it’s not illegal for health insurers to require this. Read the benefit summary carefully when you’re choosing a health plan so you’ll be aware if a health plan requires this unusual double form of cost sharing.