The portion of the covered medical
expenses you pay is called "coinsurance." There
are some deviations, but usually Fee-for-Service plans reimburse
doctor bills at 80% of "reasonable and customary charges" --
in other words, the prevailing cost of a
medical service in any given geographic area. Who pays the other
20%? You do. That amount is your
coinsurance.
What if charges are higher than "reasonable and customary"?
This is where things can get sticky ... and not just from a bandage
that needs changing. If you are covered by a Fee-for-Service plan
and your medical provider charges more than the reasonable and customary
fee, YOU will have to pay the difference.
What about hospitalization?
Some Fee-for-Service plans pay hospital expenses in full. Most,
however, reimburse at the 80% level as described above. (Lesson?
Read your policy carefully!)
So what, exactly, are "deductibles"?
A deductible refers to the amount of covered expenses you must
pay each year before the insurer starts to reimburse you. It goes
something like this:
Let's say you have a $300 deductible
The first time you visit a doctor, you are required to pay the
cost of the examination: $110. Several months later, your doctor
recommends that you have your cholesterol and triglycerides checked.
You go to the lab, have the blood drawn and pay the lab fees: $80.
You return for the results of your tests and your doctor tells you
you're healthy as an ox. Then he sends you away with a pat on the
back and a bill for another $110. At this point, you have met your
deductible of $300. After that, your insurer will reimburse you for
each doctor visit or hospital stay - usually 80%, as mentioned above.
Deductibles vary. A typical deductible is $250 per person, but
it can be lower or much higher. Some folks opt for a deductible as
high as $10,000 (that's right, $10,000) to reduce premiums or to
be used in conjunction with a medical savings account. The maximum
family deductible is usually three times the individual deductible.
As a rule, the higher the deductible, the lower the premiums.
Wait a minute ... what are "premiums"?
Premiums are the monthly or quarterly payments paid for health
insurance. They don't count toward deductibles.
Keep a few things in mind about Fee-for-Service plans
Fee-for-Service policies typically have an out-of-pocket maximum.
This means that once your covered expenses reach a certain amount
in a given calendar year, the reasonable and customary fee for covered
benefits will be paid in full by the insurer. If your provider bills
you more than the reasonable and customary charge, however, you may
still have to pay a portion of the bill.
You may have lifetime limits on the benefits paid under your Fee-for-Service
policy. Look for a policy whose lifetime limit is at least $1 million.
One major illness or extended hospital stay could easily use up a
smaller lifetime limit, and nothing is worse for your healthy recovery
than worrying about medical bills. |
