So, I am looking for a new health insurance and I am seeing alot of deductible and Out of pocket but idk how they are different. Like, I understand that prescription and visits go to your deductible but what go to your Out of pocket
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I always explain it like a two story house. The Out of Pocket max is the roof above the second floor, the Deductible is the first story ceiling.
Once you meet the costs for the deductible you usually only pay 15 or twenty cents on the dollar and the plan pays the other 80-85% for in network covered services.
Once you meet the out of pocket the plan pays 100% of in network covered charges.
The deductible is included in the out of pocket max. They usually only apply to major services unless you are in a high deductible plan. Think hospitalization surgery MRIs not every day doctor visits or prescriptions.
Example – you have a $10,000 hospital bill with a $2,000 deductible and $5,000 out of pocket max.
Assume you are in network for this scenario and coinsurance is 80/20.
You pay $2,000 and then the plan pays 80% after that and you’re only paying 20% of the balance.
$10k minus $2k leaves $8k. Of that you pay 20 cents on the dollar or $1,600.
$2k plus $1.6k equals 3.6k toward your out of pocket. As you can see it takes a lot to meet a maximum.
Often doctor visit copays and prescriptions apply to the out of pocket max but not the deductible.
Think of insurance like a shield. You have to absorb the cost (and pay premium for the coverage) to the deductible threshold and then the plan kicks in to help you 80% paid by them and 20% paid by you. You have a maximum so (hopefully) you can’t go bankrupt.
We often shop for medical benefits based on copays and the network, but the main reason you want it is to keep from a catastrophic loss.
More expensive plans per paycheck tend to have lower deductibles and less expensive plans per paycheck tend to have higher ones. High deductible health plans with HSA is a great way to go if you are good at budgeting and / or if your company matches your contributions.
You may want to request a plan comparison chart or Summary of Benefits and Coverage. They often have examples at the back to help illustrate how the plan works
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