What is the difference between Deductible and Max Out of Pocket?

Question

Ok, on my insurance plan, here's how it's laid out:

Deductible $500

Max Out-Of-Pocket (including deductible) $1400

Coverage 70/30 after Deductible

So what happens after those are paid? If I've already paid in enough for the $1400, and I need something done, how does that work? Is it totally covered? Is it all on MY shoulders?

I want to know if the surgery (which is listed as covered under my plan) will be a 70/30, or a 100/0. :)

I know it's hard to answer without seeing the details of the plan, but it really is just as straightforward as the above.

Answer 1

Deductible is the amount you pay before the insurance pays anything.

Out of Pocket Max is the amount of the deductible plus the amount you have paid in coinsurance. Once you meet what the out of pocket max is, at that time the insurance will pay the claim for you.

However, most people don't know, but you will always be responisible for the difference that the doctor bills and what your insurance allows.

Here's an example of one of my members policy:

                                                                        



DEDUCTIBLE/COINSURANCE  

DEDUCTIBLE:          

INDIVIDUAL  $1,000                                  

FAMILY      $2,000                

(one of the two deductibles must be met first)                  



COPAY/COINSURANCE:   70/30                                                

(what you are resp for after the above has been met)

Out-of-Pocket Maximum:  

Per Member $3,700              

(deductible + coinsurance once meets this ded then pd at 100% of what the insurance allows)

Answer 2

Short answer: It should be covered 100%.

If you want a longer explanation, see below.

Pretend you have $10,000 of medical bills for covered services in one year. You pay the first $500 (your deductible), and your new balance is $9,500. The 70/30 is your coinsurance. This means that the insurance company will pay 70% of the balance and you will pay 30% of the balance until you have met your out of pocket limit, $1,400. Since 30% of that balance is more than the remaining $900 you have as your max, then the insurance company would take care of $8,600. In that scenario, you would pay your entire $1,400 max.

Let's look at different scenario and say that you only had $1,500 of medical bills in a given year. You would again pay the first $500 (your deductible) and then split the balance 70/30 with the insurance company. This would mean that you would pay a total of $800, and the insurance company would only pay $700.

Just remember that the $500 deductible applies each calendar year, not for each specific incident. Once you have reached your deductible, everything else is covered at a 70/30 split until you have paid out a total of $1,400. Once you have paid out $1,400 in a calendar year, the insurance company pays the rest.

Answer 3

You should really double-check with the insurance company or HR person. However, this is my understanding:

The first $500 of expenses each year you, as the employee, have to pay.

From $501 and up, the company pays 70%. You pay 30%.

In any given year, if the 30% you pay (plus the deductible), equals $1400, after that, the company pays 100%. This is a stop gap to make sure even the 30% isn't overwhelming. It usually happens only in major years. It happened the year my child was born, for example.

Also, at a certain point, medical expenses are tax deductible. I believe when all expenses not covered by insurance equal 2% of your adjusted gross income (income minus certain deductions), you get a tax break. But check those figures with the IRS or qualified professional to be sure.