Understanding coinsurance and out-of-pocket maximum
Insurance is rarely easy to understand. Of course, you probably grasp the concept of copays and deductibles, but then they throw in other terms and charges, including coinsurance and out-of-pocket expenses. What do these terms mean, and how do they affect how much you pay for pediatric therapy?
Here is a concise explanation, so you will understand how they both work.
A review of copays and deductibles
Before we get to coinsurance and out-of-pocket expenses, let’s review copays and deductibles to make sure you understand how they work.
Your copay is the amount you pay for pediatric medical and therapy services. For example, you might pay $25 for a pediatrician visit, and $50 for a specialist visit.
A certain number of pediatric therapy visits may be covered every month and/or year by your insurance plan. Although the number of visits varies greatly from plan to plan.
Your deductible is the amount you must pay before your health insurance covers all or a portion of the bill. If your deductible is $5,000 a year, you must pay that amount on your own before your insurance will cover some of the remaining expenses.
What is coinsurance?
Coinsurance is a fixed percentage that you must pay for each service or visit. The rate might be 20%. This means you are responsible for paying 20% of the cost of care. Meanwhile, your insurance plan pays the remaining 80%.
Here’s the tricky part, and what often leads to confusion. Coinsurance applies after you have hit your deductible. In other words, even after you have reached your deductible, you will still likely have to pay a percentage of the bill.
What is an out-of-pocket maximum?
The out-of-pocket maximum refers to expenses you are required to pay out of your own pocket during a calendar year. The amount is the most you will pay for covered health care expenses. It effectively puts a cap on how much you have to spend every year. Once you have reached the out-of-pocket maximum, your insurance pays 100% of the remaining costs.
Note: Your monthly premium does not count toward your out-of-pocket maximum, but all copays, deductibles, and coinsurance do.
Here’s an example of how it works:
- Out-of-pocket maximum = $6,000
- Deductible = $4,500
- Coinsurance = 40%
If a covered medical expense costs $10,000, you pay the first $4,500 as a deductible, leaving you with $5,500. If you did not have an out-of-pocket maximum, you would still owe $2,200 because of the 40% coinsurance rate. However, if your out-of-pocket maximum is $6,000, you are only responsible for $1,500 of the balance. The insurance company pays the remaining $4,000.
As with everything regarding insurance, the out-of-pocket maximum varies widely from plan to plan.
What if you have trouble meeting the out-of-pocket maximum?
Even with an out-of-pocket maximum, the cost of treatment or therapy can be challenging to afford. If your child has a chronic physical, cognitive, or developmental condition that requires frequent doctor and therapy visits, you might struggle to keep paying the bills.
Be assured that there is help. Lumiere can help you identify state-funded health programs that are designed to help pay for children’s medical services. We also offer membership plans with discounted rates and payment options to ease the burden of ongoing therapy.
We are also happy to help you find resources and organizations that cover medical expenses, including:
- Administration for Children and Families Grants
- UnitedHealthcare Children’s Foundation
- Financial Support Groups for Cerebral Palsy
About Lumiere Children’s Therapy
Lumiere Children’s Therapy is here to provide treatment and support for children in need, education for their families, and to give hope that your child can improve and achieve traditional milestones. We strive to create experiences that help forge connections between parents and children, while also revealing the potential in each child, regardless of their skills.
- Speech therapy
- Occupational therapy
- Developmental therapy
- Physical therapy
- ABA therapy – Applied Behavior Analysis for Autism Spectrum Disorder (ASD)
- Social work
- Augmentative alternative communication
- Early intervention
If your child is struggling with speech, physical impairments, or developmental delays, we can help. We will also do our best to work with your insurance and other sources of funding to provide the services your child needs.
Lumiere Children’s Therapy is a full-service, multidisciplinary pediatric therapy practice located in Chicago that serves the developmental needs of children from birth to 18 years of age. Learn more about how our team of clinicians works to improve the lives of children and their families.