Health Insurance Cost-Sharing Methods
Nowadays, most people tend to get confused with insurance terminologies and find themselves taking up policies which they do not completely understand. Doing this can sometimes pose as a potential disaster when it comes to paying out claims. So for this article, let’s take a look at the different types of health insurance cost-sharing methods:
A Deductible is an amount you pay for medical services before your health insurance policy starts to pay. For example, let’s say your policy has an annual deductible of S$3,000. You happen to get food poisoning and have to visit the doctor who charges you S$250 for consultation and medicines. You will have to pay the entire amount of S$250 as you have not finished paying your deductible for this year and are then left with a balance of S$2,750.
During the same policy year, you have to undergo minor surgery for which the costs are S$4,000. Since you had a balance of S$2,750 left on your deductible you will need to pay this amount and balance of S$1,250 will now be paid by the insurer. Any medical costs from here on for the same policy year will be paid by the insurer up to the policy limits, this is, of course, assuming there is no co-insurance or co-payments applicable to the policy.
The higher the deductibles are the lower the premiums will tend to be and vice versa, however, you should keep in mind your specific situation when buying your health insurance plan.
Under this method of cost sharing, you and the insurer would be sharing the medical costs according to the agreed percentage. For example, if you select a policy that has a co-insurance of 20%, this would mean that the insurance company would contribute towards 80% of your medical cost and you would be responsible for the remaining 20%.
Co-insurance is often used in combination with deductibles and you would start paying co-insurance after you have completed your payments towards your deductible.
For Co-payments, these are fixed amounts that are payable each time you use the insurance policy. This makes it similar to a deductible however co-pay amounts are fairly small and are applied on every visit you make to the doctor. For example, if your policy states that S$20 co-pay per doctor visit, this means you will have pay this flat charge every time you make a visit.
In conclusion, these 3 are all out-of-pocket expenses that will be payable by you towards your medical costs. This makes it important for you to evaluate your insurance plan before you purchase it to ensure you can manage these out-of-pocket expenses when they become payable.