Lecture Notes: Deductibles and Co-Insurance in Group Health Plans

Key Concepts

• Deductibles:

  • A dollar amount that must be paid out-of-pocket before insurance coverage takes effect.
  • Common in dental plans under group health plans.
  • Individual Deductible: Specific amount (e.g., $100) an individual must pay before insurance covers additional expenses.
  • Family Deductible: A collective amount (e.g., $250) for all family members combined in a year. Once met, no additional deductibles apply for that family.

• Co-Insurance:

  • A percentage of covered expenses that the insurance company will cover after deductibles are paid.
  • Common ratios include 80/20 or 75/25, where the first number is the percentage covered by insurance.

Detailed Explanation

• Deductibles are the initial out-of-pocket expenses:

  • For example, a $100 deductible plan requires the insured to pay the first $100 of expenses.
  • Additional expenses are then covered by the plan, subject to co-insurance.

• Family deductible example:

  • If two family members each incur bills of $200, each pays $100 (individual deductible).
  • A third family member incurs a $190 bill, paying only $50 because the family deductible is reached.

• Co-Insurance Calculations: The Aftermath of Deductibles

  • Once deductibles are paid, insurance covers a percentage of the remaining expenses.
  • Example: 80/20 co-insurance means the insurer pays 80% of the leftover amount, the insured pays 20%.

Calculation Example

• Plan Details:

  • Individual Deductible: $100
  • Family Deductible: $250
  • Co-Insurance: 80/20

• Scenario:

  • Calculate the client refund after a dental expense.
  • Steps:
    1. Deduct the deductible amount first.
    2. Apply the co-insurance percentage to the remaining balance.

Study Aid

• Ensure familiarity with scenarios in textbooks that illustrate deductibles and co-insurance applications.
• Practice calculations to determine refunds or costs post-insurance application.