As with taxes, food, shelter, and all the other necessary things in life, the need for health insurance is inevitable.
As many as 96% of Americans have no idea of what their health insurance covers. While that number is shocking, it’s also a testament to many insurance holder’s fears of the unknown.
The first place to start is your current insurance policy. If you’re gotten to know your policy a bit and have realized that you fall under an 80/20 insurance plan, you may be wondering how that covers your expenses.
Stick around as we break down the ins and outs of 80/20 insurance and the benefits of having coinsurance.
A Breakdown of 80/20 Insurance
As you probably already know, the cost of healthcare in the United States is sometimes a bit surprising.
In order to help cover costs, many consumers have health insurance, which covers a portion of their medical bills.
The “80/20” of 80/20 insurance policies refers to the amount of money to be paid by either the insurance company or the policyholder.
Per the 80/20 split, your insurance company will pay 80% of your medical bills while you cover the other 20% out of pocket.
80/20 insurance, also known as 80/20 coinsurance, is a common form of insurance for policyholders looking for low monthly premiums while still obtaining some coverage for medical services.
The Fine Print Associated With 80/20 Insurance
While 80/20 insurance is a great benefit for many people, it’s important to understand the fine print often associated with many plans.
As always, the most accurate information for your individual plan is best obtained through your own insurance company.
With that in mind, let’s dive into some major points to remember about 80/20 insurance.
1. Billing
Let’s say you get billed by your healthcare provider for $1,000. When the hospital sees your insurance, they will know to automatically send 80% of the bill, or $800, to the insurance company.
This will leave you owing the remaining 20% or $200.
While this may seem like a lot of money, the cost you’ll pay is still significantly less than paying for the entire visit without any insurance at all.
This billing system works for any percentage of splits and is usually done automatically by the hospital.
Some providers may opt to have you pay for the entire visit in advance and then submit an insurance claim to obtain reimbursement for the 80% covered by your insurance.
2. Deductibles
Another major factor of health insurance that comes into play with 80/20 coinsurance is a deductible.
Deductibles are the amount of money the insured person agrees to pay out of pocket before their coinsurance takes effect.
For example, a person with a yearly $2,000 deductible would have to pay their medical bills up to this threshold before insurance would take over the majority of their bills.
After a policyholder meets their deductible, they’ll only be liable to pay their portion of the coinsurance, which in this case is 20%.
They’ll also be liable to pay any copayments they have for specific visits and services.
3. Plan Limits
When looking at coinsurance, it’s important to understand your plan limits, specifically your maximum out of pocket costs.
Your maximum out of pocket costs is the maximum amount of money you’re allowed to pay for your medical bills before your insurance agrees to cover them.
Maximum out of pocket costs vary greatly based on the insurance policy and may sometimes be subject to in-network requirements.
Is 80/20 Insurance Right for You?
In the end, 80/20 insurance offers a lot of coverage but still does require a significant financial commitment from the policyholder.
The choice of purchasing an 80/20 insurance policy all really comes down to what you can afford and what your medical needs are.
Contact us to get some more help with this decision today.