About Short Term Insurance

Cost-Sharing with Short Term Health Insurance

Cost-Sharing with Short Term Health Insurance
Most short term health insurance plans require the insured to pay a coinsurance for covered medical bills. This article will explain that requirement.

You pay good money to the insurance company every month, so you expect them to cover your medical bills in return. That’s essentially how it works, but no company pays 100 percent of your costs, not even major medical coverage. The same holds true for short term health insurance, which comes with more caps than traditional coverage. First, you must meet your deductible out of pocket. Even after that, you’re probably responsible for a portion of your bills. Known as cost sharing, this responsibility may include coinsurance, copayments or both.

Paying a Portion of Your Bills

Some short term health plans require that you pay a set percentage of all your medical bills. This arrangement is known as coinsurance, and it means that even though the insurance company may pay for a lot of your treatment, it won’t cover all of the costs. Common arrangements include 80/20 and 70/30.

With 80/20, for example, the insurance company covers about 80 percent of an eligible bill. You pay the remaining 20 percent. These amounts may apply only to in-network services. Charges from out-of-network providers may be subject to lower payments from the insurance company, such as a 50/50 arrangement. Short term plans typically have much broader networks than major medical plans because they don’t cover as many claims.

Not every temporary health plan has this sort of coinsurance. Some cover 100 percent of eligible medical costs after the deductible has been reached. Of course, these plans typically have higher premiums than comparable plans with 80/20 or 70/30 coverage.

Paying a Set Amount for Services

Temporary health insurance plans may also feature a copayment schedule. Copayments are more commonly called “copays”. The term refers to a fixed amount that you must pay when receiving certain services. Plans may have copayments for primary care physician visits, specialist visits or prescription medications.

Think of it this way: If your short term health plan has a $40 copay for office visits, you pay $40 whenever you go to see an in-network doctor. Because your plan features a fixed copayment, your portion remains the same whether the doctor’s office charges $100 or $250 for the appointment.

Some temporary health insurance plans use a combination of the two cost sharing approaches. While you pay a set fee for some services, such as doctor appointments or emergency room visits, you pay a percentage of the cost of all other services.

Cost Sharing and Your Deductible

With many short term health insurance plans, benefits don’t kick in until you have met your deductible. Until that time, you’re responsible for 100 percent of the medical costs that you accumulate. Once your deductible threshold has been reached, you will then share costs with your insurance company in accordance with your plan.

For instance, let’s say that you have an 80/20 plan with a $3,000 deductible. You go to the hospital with a broken arm. You pay the entirety of the first $3,000 yourself. For the charges above $3,000, you and the insurance company share the costs. You pay 20 percent, and the insurance company covers the remaining 80 percent.

As another example, suppose you have a plan with a $20 copay for doctor visits after your $1,000 deductible has been met. A medical test that you had done last month cost $1,000, so you’ve already met your deductible. Now you have a fever and a sore throat, so you set up an appointment with your primary care provider. You’re responsible for paying $20 for the office visit, but the insurance company pays the remainder of the fee. Keep in mind that any tests or lab work that the doctor orders will probably result in a separate charge, of which you may have to pay a portion.

Even with these shared costs, there may be a limit to how much you will have to pay for in-network services. Some plans feature an out-of-pocket maximum. Once you reach it, the insurance company will pick up 100 percent of the remaining covered medical expenses. The out-of-pocket maximum is usually quite a bit higher than the deductible, however, so you could be responsible for a good deal of your costs in the meantime. Therefore, as a savvy consumer, it’s wise to pay close attention to details about shared costs before you settle on a short-term health plan.

Life Happens.
Be Covered When It Does. Short term health plans available from around $99 per month.

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