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Understanding Cost Sharing: Deductibles, Copayments & Coinsurance

Wednesday, September 10, 2014

All health insurance requires consumers to pay some of the cost of covered health care services. This is called "cost sharing" or "out-of-pocket" costs. Cost sharing varies with different types of health plans, but most will have a copaymentcoinsurance or deductible amount. 
Cost Sharing Requirements
·         Your plan may require you to pay before the plan begins to pay. This is called a deductible (e.g. if your deductible is $500 per year you would pay the first $500 of incurred medical expenses). Plans also may charge a deductible for certain services (e.g., you pay $100 for a hospital stay).
·         You also may need to pay a portion of each visit called a copayment (e.g., you pay $10 for each prescription medication). You may have a copayment for emergency room services. Also check your plan for details emergency services for non-emergency problems.
·         Some plans require you to pay part of each service as a coinsurance (e.g., 20% of the cost of a service).
Children's Preventive Services
Children's preventive services, such as well-child checkups and immunizations, may or may not be covered without cost sharing. You should carefully review your plan's benefit description for details. The best time to review a plan is before you sign up with it.
Methods of Payment
Before visiting your child's doctor, check the accepted methods of payment for your out-of-pocket expenses. Options for payment may include cash, check, or credit card. Remember to bring your insurance card with you to each visit.
Subsidies
Medicaid and CHIP plans have very little cost sharing and subsidies will be available in health insurance marketplaces to reduce cost sharing for some families beginning January 1, 2014.
Affordable Care Act
Health care plans may have a specified annual dollar amount that can be used for specific types of health care. However, after passage of the Affordable Care Act (ACA), health plans are no longer able to set annual or lifetime limits on ‘essential’ services.
·         Under the ACA individual and small-group non-grandfathered health plans are required to provide coverage for all recommended services for children, with no cost sharing. 
·         Note: A health plan is considered ‘grandfathered” if the plan was in place when the ACA signed in March 2010.  Plans that are granted “grandfathered” status are exempt from some of the ACA provisions. 
·         Check whether their plan is considered a non-grandfathered plan.  

Last Updated 7/29/2014
Source American Academy of Pediatrics (Copyright © 2013)

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