subject: The Advantages of Coinsurance Health Plans [print this page] The Advantages of Coinsurance Health Plans
Policyholders expect 100% coverage in medical services from most health insurance plans. They do not need to pay for incurred hospital charges during consultation and hospitalization, as these expenses have already been compensated through insurance premium and deductibles. In a sense, health insurance plans serve as advanced payments for future medical and health services.
Nevertheless, there are insurance plans that require out-of-pocket payments. These are called co-payment and coinsurance. Co-payment is an additional amount of hospital fee given during consultation. On the other hand, coinsurance pays are fixed amount of payment that go to the doctor's consultation services. Co-payments are part of the total medical expenditures. Coinsurance payments are a fraction of the doctor's fee.
Coinsurance is also called indemnity insurance. Indemnity health insurance plans give patients a wider range of network providers. Some patients find this advantageous in obtaining benefits for medical services. Their lineup is composed of high-cost medical professionals and high-end medical centers. Because of this, premiums and deductibles of indemnity insurance plans are higher than other insurance plans.
In California, coinsurance payments are usually given at an 80/20 rate. For instance, Palm Springs insurance companies pay 80% of the total doctor's fee. The remaining 20% is shouldered by the policyholders. Insurance policies indicate that coinsurance charges must be "reasonable and customary". Hence, there are cases when a patient has to pay more than 20% of the incurred expenses.
Indemnity health insurance plans consider 20% coinsurance payments in computing out-of-pocket expenses caps. An out-of-pocket expense cap is a fixed amount that a policyholder has to meet before 100% coverage of medical expenses. This cap is comprised of 20% coinsurance payments and monthly deductibles. In Palm Springs, insurance companies normally have an annual ceiling cap of $2,000-$3,000. Therefore, policyholders must pay at least $2,000 from deductibles and coinsurance payments for full amount coverage of medical expenses.
Basically, policyholders do not meet the annual minimum cost for out-of-pocket expense cap. Nonetheless, indemnity insurance plans are extremely helpful in times of catastrophic health conditions. Hospitalization expenses for chronic illnesses easily reach the minimum benchmark. In Palm Springs, insurance companies pay total hospital expenditures after two-month hospitalizations and medical treatments. In these situations, the high cost of indemnity insurances is extremely utilized.
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