Cost Sharing refers to the portion of medical expenses that a policyholder must pay out of pocket, in addition to what their insurance company covers. It includes deductibles, co-payments, and co-insurance, which help distribute healthcare costs between insurers and patients. Cost sharing does not include monthly premiums, which are paid regardless of service use.
- Deductible: The amount a policyholder must pay before insurance starts covering expenses. For example, if a deductible is $1,500, the patient pays that amount first before cost sharing begins.
- Co-Payment: A fixed amount paid for specific services, such as $30 for a doctor’s visit or $10 for a prescription.
- Co-Insurance: A percentage of costs shared between the patient and insurer after the deductible is met. For instance, with an 80/20 co-insurance, the insurer covers 80%, and the patient pays 20% of the service cost.
Cost sharing encourages patients to make cost-conscious healthcare choices while preventing unnecessary medical services. However, once a patient reaches their out-of-pocket maximum, the insurance company covers 100% of covered services for the rest of the year. Understanding cost sharing helps policyholders manage medical expenses and avoid unexpected bills.
