Let’s start with the basics: What’s the difference between a co-pay and a deductible? A co-pay is a form of cost sharing for a given medical service. We see these most commonly on doctor’ s office visits, emergency room care and prescription drug coverage. This form of cost sharing is typically a set dollar amount, such as a $35 co-pay for the doctor’s visit.
This is different from a deductible. A deductible is a set dollar amount you must pay in services before your insurance kicks in. So, if you have a broken arm, for example. Let’s say the total charges are $2,000 and you have a $1,000 deductible. In this instance you would pay the first $1,000 and then your insurance would pay the rest.
One other concept or term that we should be familiar with is HSA or health savings account. An HSA is an account that allows you to save money, pre tax, to be used for healthcare expenses. They need to be associated with a qualified insurance plan that typically has a higher deductible (there’s that word again). Often these types of plans don’t have any co-pay benefit, so when you go to the doctor, you pay everything until you meet the deductible. This may sound scary, but when you realize that you can save hundreds of dollars per month on your insurance premiums, it starts to make sense.
HSA’s are just one of the many tools out there to save money on insurance, as well as on taxes. Maybe they’re the right tool for you!
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