TN Health Insurance-Insurance Terms

This is the amount you pay for medical services before your health plan begins to pay. The "deductible" amount may be a specified dollar amount or a percentage of the claim amount. The larger the deductible, the lower the premium for the same health coverage.

This term is defined differently in health insurance than it is in other types of insurance, like property. This is the amount you pay, usually a percentage, above the deductible, for each claim. Health plans can be purchased with 50/50; 70/30; 80/20; 90/10; or 100/0 co-insurance clauses.

Let's assume you have a plan with an 80/20 co-insurance clause and a $500 annual deductible. The maximum "out-of-pocket" is $2,500. You were in the hospital and it has been determined that you have accrued $5,000 in approved medical expenses:

Total approved expenses

Your deductible

Remaining expenses

Your 20% co-insurance

Remaining expenses

Plan's 80% co-insurance

$ 5,000

500

4,500

900

3,600

In this example, you have now satisfied your deductible for the year (for yourself) and have $1,400 applied to your $2,500 annual "out-of-pocket" expenses. In the current year, the most you can pay for approved medical expenses is $1,100 ($2,500 - $1,400 = $1,100). It is very important that you understand, if your provider charges more than your plan approves, you could end up paying an amount in addition to your 20%. Also, if your claims exceed the "lifetime maximum" in your policy, you would be responsible for the amount in excess of the "lifetime maximum".

This is an oversimplified example just to give you some idea of how health plans work. Your individual policy will clearly outline what "approved" expenses are and will define the terms, such as "pre-existing" conditions, lifetime maximum, etc. Read your policy carefullly.