Health Insurance Deductibles, Coinsurance and Maximum Limits

Example #1: Deductibles, Coinsurance and Out-of-Pocket Maximum

Your health plan has a:

• $4,000 deductible
• 25% coinsurance
• Out-of-pocket maximum of $5,000

This means:

• You must pay $4,000 toward your medical costs before your plan begins to cover costs.
• After you pay the $4,000 deductible, your plan covers 75% of the costs, and you pay the other 25%.
• When you've paid $5,000 out of your pocket toward your medical costs, your plan covers 100% of your costs until your "plan year" renews. A plan is good for one year.

When the next plan year begins, your deductible and coinsurance reset. You are once again responsible for the $4,000 deductible and 25% coinsurance.

Example #2: Coinsurance After You've Met Your Deductible

Let's say you fracture your hand while playing sports and you need an X-ray. If you've already met your annual $4,000 deductible, your coinsurance goes into effect. In this example, that means that your plan now pays for 75% of your benefits while you pay the other 25%.

Here's a break down of those costs:

• The X-ray for your hand costs $200.
• Your plan covers 75%, which is $150.
• The amount you pay out-of-pocket cost, or your coinsurance, is $50.

Example #3: Maximum Limits

Your health plan sets a maximum limit for certain tests, procedures and medical services. This means that it will cover up to a certain amount for these services. These limits help lower costs for all members by keeping rates fair and reasonable.

Let's say your doctor charges more for the above hand X-ray.

• Your health plan covers a maximum of $200 for an X-ray.
• Your doctor charges $250.
• You may have to pay the $50 difference.