By Susan Stewart, Licensed Insurance Agent
When I speak with Medicare beneficiaries, I notice a lot of confusion around the meaning of certain words and phrases related to Medicare Advantage plans. Let’s clear a few things up.
Copay vs Co-Insurance:
A copay is the flat amount you can expect to pay for a medical service. For example, your copay could be $0 to see a Primary Care Doctor and $45 to see a specialist. It could be $350 a day for days one through six of inpatient care. Your copay is predetermined by your plan and something you can expect to pay up front.
Coinsurance, on the other hand, is your responsibility to pay a percentage of the entire bill. If your CPAP machine costs $150 a month to rent, you would be responsible for $30 a month. That’s 20 percent of $150, which is a normal co-insurance for durable medical equipment.
Where it gets tricky is with in-network versus out-of-network coverage. With some plans your in-network copay for inpatient hospital care could be $350 a day for days one through six. However, if you go out of network, you could be responsible for 40 percent coinsurance on the entire bill.
The financial ramifications of that are massive. Paying attention to where in your plan you would have copays or co-insurance is an important detail and one to consider when choosing health insurance.
HMO vs HMO-POS vs PPO:
An HMO is a type of healthcare plan that requires you to stay in your network for your medical expenses to be paid. With an HMO, you must have a referral via your primary care provider to see a specialist. Typically, HMOs offer richer benefits, lower maximum out-of-pocket expenses, and lower copays than other options. In return, you must be diligent about staying in your network.
An HMO-POS is a hybrid between HMO and PPO. Most plans don’t require specialist referrals, but you still must stay in your network.
A PPO can be easier to use than an HMO or HMO-POS in certain circumstances. You don’t need a referral to see a specialist, and you can opt for care outside of your plan’s network. The tricky part of a PPO is being aware of your out-of-network responsibility. If your in-network specialist has a copay of $45, but an out-of-network Specialist has a copay of $65, that’s acceptable. However, if your out-of-network specialist has a co-insurance of 40 percent, you’re looking at a much larger responsibility. The freedom to go out of network can also mean a higher maximum out-of-pocket expense. It could be $5,000 if you stay in network, but if you go out of network, it could be $9,000 for in-network and out-of-network combined, just as examples.
