Buyer beware! Most people don’t realize just how much out-of-pocket spending a healthplan may cost them until they become seriously ill or are hospitalized. The below article sheds light on the out-of-pocket expenses many consumers face and what they should be aware of when choosing a healthplan.
By WALECIA KONRAD
If you’re like most people, you may think they are the same. But while it is true both terms refer to the portion of medical bills you pay out-of-pocket, these two types of cost-sharing are quite different.
A co-pay is a fixed amount that you pay each time you see a doctor or fill a prescription, usually around $10 or $20. Co-insurance is the percentage of the cost of doctor visits, hospitalizations and prescription drugs that you must pay under your insurance policy.
Let’s say your policy calls for 80/20 co-insurance. After you meet your deductible, you must pay 20 percent of your medical bills; the insurance company is responsible for the remaining 80 percent.
Many plans demand both co-pays and co-insurance. Co-insurance is especially common when it comes to hospital stays. Of all workers covered by an employer-sponsored group health plan, 51 percent must pay co-insurance for hospital admissions, according to the 2009 Kaiser Family Foundation survey of employer health benefits. The average payment is 18 percent of the total. And 53 percent of covered workers pay co-insurance for outpatient hospital visits, with an average charge of 19 percent.
Co-insurance is common in the individual insurance market. And as companies head into this fall’s open enrollment season, many are considering a switch from co-pay to co-insurance as a way to increase employee cost-sharing and contain rising health benefit expenses, said Tom Billet, director for health and group benefits at the consulting firm Towers Watson.
Because of the confusion involving co-pay and co-insurance, many patients don’t realize just how much it may cost them until they become seriously ill or are hospitalized, said Lynn Quincy, a senior policy analyst at Consumers Union. “Ten or 20 percent may not sound like much, but 20 percent of a $100,000 surgery is a lot of money,” she said.
Co-insurance payments can add up quickly for seriously ill patients. It’s not unusual, for example, for a cancer patient to need $40,000 worth of medicine in a given year.
“Co-insurance on that could be as much as $14,000, and that’s just for the drugs. That’s not even counting going to the doctor or the hospital yet,” said Stephen Finan, senior director of policy at the American Cancer Society’s Cancer Action Network.
High co-insurance and other out-of-pocket costs, including insurance premiums, can sometimes discourage patients from receiving the treatment they need. One in three individuals under age 65 diagnosed with cancer has delayed needed health care in the last 12 months, according to a Cancer Action Network poll.