Most health insurance plans do not provide a blank check for medical services. You usually need to pay some portion of your medical costs. This keeps the monthly premium costs of insurance lower and stops people from overusing medical care. One way insurance companies divide costs is through co-insurance plans such as an 80/20 medical plan.
Co-insurance is a type of cost-sharing plan between you and your insurance company. You need to pay a certain percentage of your healthcare costs and the insurance company pays the rest. The plan formula is usually listed in the name of the plan so customers can easily figure out how much they need to pay. The insurance company's coverage is listed as the first number, while the customer's percentage is listed second. For an 80/20 plan, your insurance company will pay for 80 percent of your care and you'll be on the hook for other 20 percent.
An 80/20 plan splits up your bill immediately after treatment. When a doctor or hospital administrator sees your card, he will know to send 80 percent of the costs to your insurance company and leave you with the remaining bill. For example, if your doctor charges you for $1,000 worth of care, your insurance company will pay for $800 of the treatment and you will need to cover the remaining $200. This means you'll still have to pay a sizable amount of your healthcare bills, but you get a big discount compared to someone with no insurance.
When you are enrolled in an 80/20 plan, you'll have other costs on top of your 20 percent share of medical bills. To purchase medical insurance, you need to pay a monthly premium to your insurance company. This money only keeps your insurance active and can not be used to pay future medical expenses. Your plan might also charge a deductible for the year. A deductible is the amount you need to pay completely on your own for healthcare before your insurance kicks in. If your plan has a $2,000 deductible, you'll need to pay all of your first $2,000 in expenses before the 80/20 split comes into play.
Your 80/20 plan might also have limits on healthcare spending for major expenses. One type of limit is a ceiling for the coinsurance. If your bills go over the coinsurance maximum limit for the year, your insurance company will start paying 100 percent of your costs for the rest of the year. Your plan could also have a lifetime coverage limit. In this case, your plan will cover only up to a certain limit of expenses. If your bills go over this amount, your coverage ends and you'll be on your own. This information will be listed in your health insurance policy.
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