Having medical insurance coverage never means that an insurance carrier pays all the costs of healthcare services. Cost shares are the mechanisms that insurance carriers use to determine how much of each medical bill the carrier pays versus how much the member should owe. There are multiple types of cost shares:
Deductible: The deductible is the amount of money a member is required to pay out-of-pocket before the plan “kicks in” and the carrier begins paying for services. A lower deductible means the plan starts paying earlier, while a higher deductible means a member will have to pay more out-of-pocket costs before the plan participates (thereby increasing overall costs for the member). With some plans, there are specific services that are covered even before meeting the deductible (usually ongoing or preventative services that the plan wants to encourage members to take advantage of). These are called “First Dollar Benefits”.
Max-Out-Of-Pocket (MOOP): The Max-Out-Of-Pocket (MOOP) is the maximum amount a member will have to pay out-of-pocket for covered healthcare services in a plan year. Once this limit is reached, the insurance carrier pays 100% of the costs for covered services for the remainder of the year. The MOOP includes deductibles, co-pays, and co-insurance, but does not typically include premiums. This limit provides financial protection for members by capping the amount they need to spend on healthcare in a given year.
Co-pay: A co-pay is a fixed amount that a member pays out-of-pocket for a specific healthcare service at the time of service. Co-pays are often required for routine services like doctor’s visits, prescription medications, or specialist appointments. Co-pays typically do not count toward the deductible, meaning you pay these amounts even before reaching your deductible. However, co-pays usually do count toward the Max-Out-Of-Pocket (MOOP), meaning they contribute to the total amount you need to spend before your insurance covers 100% of the costs.
Co-Insurance: Co-insurance is a percentage that a member pays for the cost of a covered healthcare service, typically after the deductible has been met. For example, if a plan has a 20% co-insurance rate, the member would pay 20% of the cost of the service, while the insurance carrier would pay the remaining 80%. Unlike co-pays, which are fixed amounts, co-insurance is based on the total cost of the service., This means that the amount paid by the member can vary depending on the service’s price. Co-insurance payments do count toward both the deductible and the Max-Out-Of-Pocket (MOOP) and therefore can reach a maximum amount for a plan year.