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INSIGHTS INTO INSURANCE

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1. Insights into Insurance — What's the difference between a health insurance deductible and a co-payment?

What's the difference between a health insurance deductible and a co-payment? Deductibles and co-payments (also called coinsurance) are common cost-sharing features of many health insurance plans today. A deductible is a set amount you must pay each year before your insurance kicks in. Here's a simple example: If your plan has an annual deductible of $1,000, and your first doctor bill of the year is $400, you would be responsible for paying the entire amount out of pocket. If you have a second doctor visit that results in a $700 bill, you would be responsible for the $600 ($400 + $600 = $1,000). Your insurance would then help pay the amount over $1,000 — in this case, $100.


However, once you've met your annual deductible, you may still have a share of cost, or co-payment, until you've met your plan's annual out-of-pocket maximum. Your co-payment is a set amount you pay each time you receive a certain type of service from a health care provider.


Amounts of deductibles, co-payments and annual out-of-pocket maximums vary by insurance plan. When you're shopping for insurance — especially health coverage in retirement, for instance — it's a good idea to talk with a trusted advisor who can help you find innovative options that best suit your needs and your budget.


Source: "Deductible vs. Copayment: What's the Difference," by Elizabeth Davis, RN, verywellhealth.com, updated November 7, 2018


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