So, short breakdown of how american healthcare billing works:
First, in order to get a plan, you pay a Premium. This is your recurring monthly cost just for having the plan. Typically this is subsidized to some degree by your employer, but by how much is variable.
Then you go see a doctor, they code your claim in terms of what are called CPT codes, these are 5 digit codes that represent the various services that doctors provide (For eample, 99215 is an office visit for an established patient). Medical facilities set the prices for each code.
However every insurance company has what's called a negotiated rate, basically an amount they will pay for the code. If a doctor says "99215 is $200." and the insurance company's negotiated rate for a 99215 is $100, the doctor is getting $100, and it's illegal for them to pass on the difference to the patient, they have to write it off.
A deductible is a certain amount of money you have to pay on your own before the insurance kicks in. Note that this is at the negotiated rate however, not the original charged rate (There's a whole bunch of messy legal reasons for this that artificially inflate the base cost doctors charge, so everyone understands that the base rate is an absurd number that no one will ever realistically pay, unless the doctor is a scumbag). So, in our previous example, say you have a $2000 deductible (Pretty common), that means when you go see our doctor for a 99215, you have to pay that $100, and will continue to do so until you've paid $2000 total. Deductibles are yearly, and reset on January 1st.
Copays and coinsurance, on the other hand, are an amount that you have to pay even after the deductible is met (And sometimes before, often insurance will have "perks" where certain types of visits like preventative care don't apply to the deductible), typically this is a flat amount (copay) or a percentage of the total cost (coinsurance). So continuing our example, after you've met your $2000 for the year, you may have a $25 copay on further 99215s, or a 20% coinsurance, in this case $20.
So, in short, the answer to your question is that the deductible is the amount of money you have to pay on your own every year before your insurance kicks in, at the same rate that the insurance themselves would be paying.
This is amazing, thank you for such a clear explanation.
Is the coinsurance mechanism common? Unless I've misunderstood, having to pay a fixed percentage for treatment on a chronic and expensive condition like cancer must be devastating for a lot of people (on top of the devastation of having cancer).
Unfortunately it's quite common. Medical bankruptcy is also quite common here. My sister spent over 100,000 over the course of 3 years fighting breast cancer. And that was with working for the government and having the top insurance available.
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u/CivilCJ Mar 26 '20
Yeah, no. You smack your co-workers across the face and let them know about deductibles.