Using your Principal Dental insurance plan may be easier when you become familiar with common health care terms and what they mean. It can also make it easier to manage your budget when you learn what the cost terms will mean for your wallet. Here are the differences between copays, coinsurance, and out-of-pocket maximums.
What is Copay?
A dental insurance deductible is the amount you pay out-of-pocket for covered dental services before your insurance plan starts to pay expenses for you. This amount usually resets annually.
A copay, or copayment, is an established amount you will pay for a covered health care service, most often at the time of the service. How does the copay work? You might remember when you went in for a doctor’s visit and paid a $20 or $25 copay at the front desk. Copay amounts will vary based on both the provider and the service. With health plans that have copays, you will know exactly what you must pay ahead of time, which helps you budget your health care expenses. For some plans, your copay will not apply toward your deductible. Some services might be covered at no additional cost, such as an annual wellness exam and other preventive care services.
What is Coinsurance?
If you have a Preferred Provider Organization, or PPO, dental plan, any remaining balance you pay is called coinsurance, which usually ranges from 20% to 80% of the total charge.
Coinsurance means a percentage of the cost of a covered service. Until you have reached your plan’s deductible, you pay 100% of out-of-pocket costs. After you have met your deductible amount, you and Principal Dental Insurance each pay a share of the costs, which then adds up to 100 percent. Common coinsurance ranges from 20% to 40% for you, with your plan paying the balance. Cost-sharing percentages will vary depending on your plan. How does coinsurance work? If your dental visit costs $100 and you have met your deductible, your coinsurance payment of 20% would be $20 out of your pocket. Your insurance plan would pay the rest of the allowed amount, or $80. This will not apply until after you have reached your deductible. Until then, you will pay 100% of the cost.
What is an Out-of-Pocket Maximum or Limit
Most dental policies cap, known as an annual maximum, how much is spent on your dental procedures. Coverage maximums usually range from $1,000 to $2,000 per year. If you reach the yearly maximum amount of coverage, you are then responsible for paying 100% of any remaining dental costs.
You might have heard terms like out-of-pocket maximum or limit. They are the same. Your out-of-pocket maximum or limit is the highest amount you can pay during a 12-month coverage period for your share of any costs. Usually, copays, deductibles, and coinsurance all add toward your out-of-pocket maximum. Your monthly premium, balance-billed charges, or anything your plan does not cover, such as out-of-network costs, will not add to the maximum.
For example, if the dental charge is $100 and the allowed amount is $70, the dental office might bill you for the remaining $30. A preferred dental provider may not balance bill you for the services covered.
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