February 1, 2025
UNDERSTANDING THE BASICS OF INSURANCE COVERAGE
Navigating the world of insurance can be overwhelming, especially if you’re new to it. Whether you’re dealing with health insurance, auto insurance, or any other type, understanding the key terms and how they affect your coverage is crucial. In this blog post, we’ll break down some of the most common insurance terms you’re likely to encounter: deductible, in-network, out-of-network, copay, and coinsurance. Let’s dive in!
1. DEDUCTIBLE
The deductible is the amount of money you must pay out-of-pocket for services covered by your insurance before your insurer starts to pay. For example, if you have a $1,000 deductible, you will need to pay the first $1,000 of your medical bills (or other covered expenses, depending on your plan) before your insurance coverage kicks in.
Once you’ve met your deductible, you typically won’t have to pay the full amount of future claims — your insurance will cover a larger portion, though there may still be additional costs, like copays or coinsurance, which we will talk about later.
2. IN-NETWORK
When your insurance plan has a list of healthcare providers or facilities it has contracted with, these are referred to as in-network providers. These providers have agreed to offer services at reduced rates in exchange for being part of your insurer’s network.
Visiting an in-network provider typically means you’ll pay less for care, as your insurance covers a larger portion of the costs. It’s usually more affordable than going out-of-network, as your insurance company has negotiated rates with these providers.
3. OUT-OF-NETWORK
Out-of-network refers to healthcare providers or facilities that do not have a contract with your insurance company. When you seek care from out-of-network providers, you may face higher out-of-pocket costs. In most cases, your insurer might cover a portion of the costs after you’ve met an out-of-network deductible.
Sadhana Health is an Out-Of-Network provider. This allows us to provide high quality healthcare services without insurance limitations or constraints.
4. COPAY
A copay (or copayment) is a fixed amount you pay for a specific service or prescription. For instance, you might have a $20 copay for a doctor’s visit or a $10 copay for a prescription medication.
Your copay is due at the time of service, and the amount varies based on the type of care you receive. Copays are typically lower for in-network services and may be higher for out-of-network care. Keep in mind that copays are part of your overall out-of-pocket costs, but they do not count toward your deductible.
5. COINSURANCE
Coinsurance is the percentage of costs you must pay for a covered service after you’ve met your deductible. For example, if your plan has 20% coinsurance, you would pay 20% of the bill for a medical procedure or treatment, while your insurance covers the remaining 80%.
Unlike copays, which are fixed amounts, coinsurance can vary based on the cost of the service you receive. Also, coinsurance continues until you reach your out-of-pocket maximum, which is the cap on how much you’ll pay during the year.
PUTTING IT ALL TOGETHER
Let’s say you visit a doctor for a treatment that costs $500, and your insurance plan has the following terms:
- Deductible: $1,000
- Copay: $30
- Coinsurance: 20% after deductible
- In-Network: Yes
If you’ve already paid $1,000 toward your deductible this year, and this doctor visit is in-network, here’s how the payment breakdown might look:
- The first $30 you pay is the copay for the visit.
- After that, you’d pay 20% of the remaining $470, which is $94.
- Your insurer will cover the remaining $376.
So, in this case, you would pay $30 for the copay and $94 for coinsurance, totaling $124 for the visit.
FINAL THOUGHTS
Understanding insurance terminology can help you make informed decisions about your healthcare and financial planning. While terms like deductible, in-network, out-of-network, copay, and coinsurance may seem complex, breaking them down step-by-step makes them easier to understand.
Always review your insurance policy carefully, and don’t hesitate to reach out to your insurance provider if you have questions about coverage. Staying informed can help you maximize your benefits and avoid unexpected costs.
DO YOU STILL HAVE QUESTIONS?
If you are a patient intending to seek insurance reimbursement for the first time, you will want to contact your insurance company prior to your first visit to fully understand your benefits. Contact our office and ask for our Insurance Reimbursement Worksheet which will help guide you through what questions to ask your insurance company.