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Thu Mar 20, 2014, 04:47 PM

Health insurance fundamentals - deductibles, copays - Help! this makes no sense

Confusing -- I thought the patient paid EVERYTHING up to the deductible, and the insurance co. paid NOTHING. But John Waski says this:

A Procrastinator’s Guide to Picking an Obamacare Plan, John Waski, FiscalTimes, 3/19/14

{Speaking of Bronze Plans} : For $662 a month, one Blue Cross/Blue Shield plan (in Illinois), offered a preferred provider organization. If providers were in the network — it was more expensive if they weren't — Blue Cross would fully cover all expenses after a yearly family deductible of $12,700 was met. Under that amount, 60 percent of expenses were paid for in this bronze plan. { The last sentence is a big Huh? }

There was a catch, though: After a deductible was met, there would be a 20-percent co-insurance fee for doctor's visits. So let's say that our doctor charged $100 per visit. Before the deductible, the insurer would pay $60 and we'd be on the hook for $40. After the deductible, we'd still have to pay $20 a visit. { The bold sentence is a big HUH? }

All of the policies I surveyed on the bronze level had some sort of "gotcha" that involved additional out-of-pocket costs. Some policies charged 40 percent co-insurance for specialists; others for generic prescription drugs. And the co-payment varied. One higher-premium policy charged a flat $100 for specialists and a 40 percent co-payment for generic drugs.


Here's an example: In a normal year, our family pays about $2,500 in out-of-pocket costs — mostly for doctor's visits and tests. A bronze-level policy would cover $1,500 of that { 1500/2500=60% }, all of which would fall under the $12,700 maximum for most of these policies.

To avoid the potentially costly co-payments on physicians, we'd have to spend $1,000 a month { 12,000 / yr } in premiums in a policy that would suit our present needs — about $300 more a year than we're paying now { $300/month = 3600/yr doesn't add up either, did he mean $400/month = $4800/year? }. But the difference between our present premium ($7,200) and the higher HealthCare.gov policy is $4,800 { 12,000 - 7,2000 = 4,800, at last something checks }, so we wouldn't save any money.

Everything in { braces } is mine.

My understanding of deductibles, coinsurance, and copays is the level of https://www.healthsherpa.com/learn/how-insurance-works
but it is apparently missing an important piece of it like the insurance co paying some costs before the deductible????

In the article above, maybe he used the word "deductible" when he meant "out of pocket maximum", but some of it still doesn't make sense.

I know there are some ACA services that are free, regardless of what ones deductibles and out of pocket maximums and any of that other stuff, like preventive screenings, contraception, and I think one annual wellness visit (or is the last one just Medicare), but in the above I'm talking about the other "non-free" stuff.

Is the author out to sea? Or me? I'm trying to get a policy before the March 31 deadline (yeah, I know I have to pay the first month's premium by then too...) and thought I understood things until reading the above article, and now I'm wondering if I understand a damn thing. Thanks for any comments.

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Response to progree (Original post)

Thu Mar 20, 2014, 04:49 PM

1. Bronze plans are for the very young with little healthcare needs...


They are not meant for everyone these are catastrophic....try to get a Silver plan...you will be in much better shape

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Response to VanillaRhapsody (Reply #1)

Thu Mar 20, 2014, 04:52 PM

2. I agree. I'm just trying to understand the fundamentals so I can shop wisely amongst

say the silver or the gold. I will be concentrating on silver and above. Thanks for your respsonse

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Response to progree (Reply #2)

Thu Mar 20, 2014, 04:55 PM

3. Yes...almost everyone should concentrate on Silver or better...


I happen to know that the Silver plan where I am is identical to the one provided to employees in this state.

Go with Silver and a PPO if you can afford it.

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Response to VanillaRhapsody (Reply #3)

Thu Mar 20, 2014, 11:27 PM

9. "and a PPO" - this link explains that, and HMO, POS, EPO, ...


For anyone (like me) who might need a clear explanation. I didn't come across this until last night. Yes, the PPO is the most flexible.

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Response to progree (Original post)

Thu Mar 20, 2014, 05:11 PM

4. According to this, whether you have to pay the whole deductible before doing co-pays or

whether some services can be co-pays even if your annual deductible isn't met depends on the provider.


In the latter case, it doesn't say if the provider counts co-pays toward the deductible.

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Response to progree (Original post)

Thu Mar 20, 2014, 05:24 PM

5. I think our system of regulated private for-profit health insurance sucks, totally sucks, and should


be abolished. The for profit insurance companies, having had a huge part in writing the legislation for the ACA, are now off using the byzantine complexity of the regulatory system they helped created to continue to farm their "clients" for every dollar they can extract from them while providing the absolute minimum access to health care services possible in return.

Whenever we manage to get a majority in congress and a Democratic president, we should do what should have been done in 2009: medicare for everyone.

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Response to Warren Stupidity (Reply #5)

Thu Mar 20, 2014, 11:17 PM

8. Oh Bull! This is fun, Fun, FUN!!! It's waterboarding for the masses! n/t

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Response to progree (Original post)

Thu Mar 20, 2014, 06:08 PM

6. You'll have to spend a certain amount out of pocket

every year. Before the deductible is reached, you'll have to pay 40% of the tab for covered services. After the deductible is reached, you'll pay the cheaper copay until you've reached the maximum for out of pocket expenses for that year, something that would happen with severe accident or catastrophic illness.

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Response to Warpy (Reply #6)

Thu Mar 20, 2014, 11:14 PM

7. "Before the deductible is reached, you'll have to pay 40% of the tab"

I thought I had to pay 100%, everything, until the deductible was reached. So like if my deductible is $3,000, and I have $3,000 in covered expenses, then I pay $3,000 and the insurance company pays le zilch.

If I had $4,000 of covered expenses, I would have to pay $3,000 plus 20% (or whatever the coinsurance percentage might be) of the remaining $1,000 (assuming my out of pocket maximum was not exceeded), for a total of $3,000 + 20% * $1,000 = $3200, and the insurance company would only pay $800.

So it is surprising to read that I might only have to pay as little as 40% until the deductible is reached. That would be great. But it's something I haven't seen before, and is contrary to the HealthSherpa example (
https://www.healthsherpa.com/learn/how-insurance-works ) (scroll down to a bit past the middle of the page to the last pretty blue and green diagram where the consumer pays the entire deductible, and then coinsurance -- the 20% -- kicks in). Ahh, here it is:

Now, according to the above link, copay is quite a different animal than coinsurance. Quoting from the healthSherpa link (all emphasis mine)

Coinsurance -- e.g. 20%, always a PERCENTAGE, I think --
"The percentage of a total medical bill that Bob pays after he has reached his deductible. The rate on coinsurance varies depending on the type of care. Bob pays his coinsurance until he reaches his Out of Pocket Maximum (OOPM). After that, the insurance company will pay all of Bob's remaining medical bills for the year."

Copay -- e.g. $30, always a DOLLAR AMOUNT, I think --
"A copay is a flat fee that Bob pays whenever he does certain things like visit the doctor or pay for prescription drugs. Bob will pay a different amount for each visit or drug. Bob pays his Copay when he sees a physician or orders certain prescription drugs. Copay is normally NOT part of Bob's deductible or Maximum out of Pocket, and Bob still has to pay copays even after he reaches his Out of Pocket Maximum."

In the below, I now use the word "coinsurance%" to reflect my understanding that coinsurance is always a percentage. And I use the word "copay$" to reflect my understanding that copay is always a flat dollar amount.

So in the above and the healthsherpa link and those diagrams, coinsurance% is kind of a simple thing -- it isn't an issue until the patient pays the entire deductible, then it kicks in and applies to the next tier of expenses until the OOPM is reached, and then it goes away.

Whereas the copay$ is kind of a wild card (in my view) -- its charged for every service that charges a copay$, is totally independent of deductibles and OOPMs, how much one has already spent, etc. etc. Even if one has reached the OOPM, it is charged, so that one's out of pocket expenditures will exceed the OOPM in this case (that is illustrated in the final diagram of the healthSherpa link where his total expenditures for the year is:
Premium + OOPM + copay

The link in #4 (thanks Valerief!) ( http://www.ehow.com/info_8785329_deductible-vs-copay.html ) also starts out confirming my understanding of deductible:

A deductible is the dollar amount of covered services you're responsible for before your insurance plan begins coverage.

But then it says this:

Deductible vs. Copay - Your insurance plan will specify whether you need to pay the deductible before your co-pays apply or whether you can pay your co-pay amount for some services, even if your deductible isn't met. Your health insurance plan, for example, may have a $250 deductible but all primary doctor visits have a $10 co-pay, even if your deductible hasn't been met.

So this description of copay$ is more flexible than the one described by HealthSherpa. HealthSherpa kind of indicates that the copay$ always applies, independent of how much or how little has been spent, and regardless of the deductible and the OOPM, and doesn't count towards satisfying the deductible or the OOPM.

Whereas EHow is saying is, well smoggy. They kind of make it sound like in some cases it's a privilege -- rather than having to pay for EVERYTHING up to the deductible, they are kind of saying for some services the insurance co. pays a portion, even if the deductible amount hasn't been reached.

Then EHow gets into Coinsurance%. They say it is a percentage, but they don't say anything about how it interacts with the deductible or the OOPM.

Anyhoo, I think what I'm going to have to do is get rid of any rigid ideas in my head about what any of these things are (which makes screening impossible), but just select (for study purposes) some Gold PPO plan as a starting point and read all the details and hopefully they will be clear what they mean by each of these terms. Then do the same with the Gold PPO plan from another insurance company, and repeat. And compare and contrast their use of these terms.

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Response to progree (Original post)

Wed Mar 26, 2014, 10:07 AM

10. Those of you in New Jersey

can find a video and some links at http://yourHHRSnews.com this week.


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