Navigating Insurance Deductibles, Copays and Coinsurances

 Health insurance terms can be confusing and overwhelming for clients and providers alike. Here we try our best to explain some basics.

What is a deductible?

​For mental health coverage, a deductible (if it applies) is the amount you pay out-of-pocket for covered services before your insurance company starts to share the cost. Once you meet your deductible for the plan year, you will likely only owe a copayment, coinsurance, or percentage for future sessions.

Mental health deductible:

The annual cost you pay first: The deductible is a set dollar amount that you are responsible for paying each year before your insurance starts to assist. For example, if your plan has a $1,500 deductible and a $30 copay, you will pay 100% of your mental health care costs until you've paid $1500 for the year and before your insurance covers part of the cost. 

This does NOT mean that for a session/one service you pay $1200. It means that you pay the full contracted amount for the service each session ($80 for example) until you have met the deductible for the plan year. Additionally if you attend 4 sessions and pay $320 towards them and then stop therapy, you would NOT need to pay further towards the deductible as it applies to USE of services.

Example: 

In-network therapist's contracted fee: $80 per session

Deductible: $1200

Copay: $30

You would pay $80 per session for 15 sessions ($1200) and then the cost would be reduced to $30 per session for the remainder of the year.

Deductibles reset annually: Your deductible resets at the start of each plan year. This means you will need to meet it again when the plan year renews before your insurance begins to cover costs again.

After meeting your deductible: Once you've paid the full deductible amount, your insurance will begin to cover a portion of your therapy costs. At this point, you will likely transition to paying only a copayment or coinsurance (the example of $30).

*Does not include premiums: The deductible is different from your monthly insurance premium. Your premium is the fixed amount you pay to your insurance plan, regardless of whether you use any services.

What are copays and coinsurances?

This pertains to the amount you pay aside from any deductible that may or may not apply. 

Copayment: A fixed dollar amount you pay for each session ($30)

Coinsurance: A percentage of the cost you pay for each session (10% so for example $10 percent of $80 would be $8.00).

While most insurance plans have EITHER a copay OR deductible it is possible for them to apply both and depends on your plan.

Another example:

In-network therapist's contracted fee: $80 per session 

Annual deductible: $1200

Coinsurance: 20% ($16)

Here’s how your costs would be calculated:

First 15 sessions ($80 x 15 = $1200): You would pay the full $80 for each session. By the 16th session and for the rest of the plan year your 20% coinsurance kicks in. So, for the remainder of the year you pay $16.

Some plans either do not have deductible at all or the deductible does not apply to mental health services. When you start therapy here we get a quote from your insurance regarding deductible and copay/coinsurance and if your deductible applies.

 

Thank you and we hope this is of help.