Co-insurance is the amount you’re required to pay for medical care in an indemnity plan after you have met your deductible. The coinsurance rate is usually expressed as a percentage, such as 20%. This means, you pay 20% of the eligible medical costs and your insurance company pays the other 80%.
A co-payment is another way of sharing medical costs, in which you pay a flat fee every time you receive a medical service, such as RM50 for every visit to the doctor. The insurance company pays the rest of your bill.
While we’re on definitions, let’s look at several other important medical insurance terms.
It doesn’t matter whether you buy an indemnity or a managed-care plan, only certain medical services are covered under the plan. These covered expenses, which are listed in the policy, are the medical procedures or services that your insurance company agrees to pay for.
And, as with almost any type of insurance, your health insurance policy also has exclusions. These simply are the specific conditions for which the policy will not provide benefits. To put it another way, exclusions are the non-covered expenses.
Before buying a health insurance policy, you may have a medical condition diagnosed or treated. Insurance companies call this a pre-existing condition. The longest you’ll have to wait before you’re covered for a pre-existing condition is 12 months.
All indemnity plans and some managed-care plans have out-of-pocket maximums to limit the amount you have to pay in a given year. When your deductible and coinsurance have reached a certain amount, then your insurance company will pay 100% of the cost (instead of just 80%, for example)… up to the lifetime maximum benefit amount.
And, when the lifetime maximum benefit has been reached, then your insurance company won’t pay for any more of your medical costs. This is why it’s important for you to choose a plan that has a lifetime maximum benefit of at least RM1,000,000.
If you presently have a medical insurance policy, then check to see what is the lifetime maximum benefit. And, if it’s less than RM1,000,000, then you may consider raising it or buying additional coverage to give you $1,000,000 of lifetime maximum benefit.
Since few people ever reach the maximum lifetime benefit payment, it may cost you little additional premium to increase your present amount to $1,000,000. While you may never reach the $1,000,000 limit, the security and peace of mind you’ll gain from having the extra coverage… will be worth the small premiums paid.
As we’ve discussed, you just never know when you or a loved one may get into a serious accident or illness that requires expensive medical care.
For instance, in Christopher Reeve’s case, even though his health insurance policy has a maximum lifetime benefit of $1.2 million, with a medical bill of about $400,000 a year, he would reach his limit in only 3 years. In fact, as of this writing, he has already reached his limit. So now he has to pay for all his medical bills out of his own pocket.
Fortunately, Reeve has the financial resources to pay his medical bills. So his family doesn’t have to suffer financial hardships… while he gets the proper medical care he needs.
Unlike Christopher Reeve, you, like most people, probably don’t have such a privilege. So you need to protect your family with the right medical insurance policy.
Anyhow, whether you buy an indemnity-type or a managed-care-type plan, you should buy one that’s non-cancelable (or guaranteed renewable). This is a policy that guarantees you coverage as long as you pay the premium, regardless of your health condition.
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