Health plans exist so participants do not have to pay the full cost of medical services. To do this, participants share the cost of services with their employers or the insurance companies.
Cost sharing happens through copays, coinsurance and annual deductibles.
- An annual deductible is the amount a participant must pay over the course of each calendar year before the plan pays benefits.
- For example, if a plan's annual deductible for an individual is $400, the participant must pay their health care provider(s) for the first $400 of covered charges before the plan starts paying benefits. Typically, copays do not count toward meeting the annual deductible.
- Plans typically have different deductibles for individuals and families. Family deductibles are usually higher than individual deductibles. For many plans, each covered expense incurred by any participant in a family plan (such as dependents) applies toward the family deductible. Other plans may require that a minimum number of participants in a family plan each reach the annual deductible before the plan pays benefits for all participants.
- Coinsurance is the percentage of the cost of a covered service or supply that must be paid by a participant after the plan's deductible is met.
- For example, if a plan pays 80% of a covered service, the participant must pay the remaining 20%. The 20% is the coinsurance.
- Typically, your coinsurance is lower when you visit in-network providers.
- For example, a plan may pay 90% of a covered service performed by an in-network provider and 70% for an out-of-network provider. The participant's coinsurance of 10% in-network is lower than the coinsurance of 30% out-of-network.
- Using the above example and presuming the deductible is met, if the cost of a hospital stay is $2,000, the 70% out-of-network benefit is $1,400 and your 30% coinsurance is $600. But, if you use an in-network provider, the 90% benefit is $1,800 and your 10% coinsurance is only $200.
- Copays are set dollar amounts that participants pay when receiving care at in-network or
out-of-network medical providers. Participants may also pay copays when filling prescriptions at a retail pharmacy or by mail.
- For example, a plan may require that you pay $10 whenever you visit a covered physician or a participant may need to pay a $20 copay when filling a brand-name prescription at a retail pharmacy.
- There are usually various copays for different services, depending on plan design. Copays generally do not apply to the annual deductible.
Medical plans typically protect participants from very large medical expenses through the annual out-of-pocket maximum. This is the most a participant will pay out-of-pocket during the plan year for covered medical expenses.
Out-of-pocket expenses can include payments toward the deductible as well as coinsurance payments. However, some plans may exclude the deductible from applying to the annual
out-of-pocket maximum. Copays usually do not apply to the annual out-of-pocket maximum.
After reaching the annual out-of-pocket maximum, a plan typically pays 100% of covered expenses. For example, if a plan's annual out-of-pocket maximum is $3,000, the plan will pay 100% of covered medical expenses once a participant pays $3,000 toward the deductible and for coinsurance.
Please contact the Fund Office if you have questions about how any of the above cost sharing features work on Benefit Trust Fund medical plans.