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October 2, 2013

Will consumers save on health care, too?

TRAVERSE CITY -- The basics apply when consumers attempt to determine whether they can save money when using tools to shop for health care.

A deductible: The amount one pays for health care services before health insurance kicks in. A person with a $5,000 deductible, for example, must pay 100 percent of his or her health care bills (at prices negotiated by the insurer) until the person "meets" the $5,000 level. After that, the insurance company might pay 100 percent for some services, or may require the person to pay "coinsurance."

Coinsurance: That's the share of the costs of a health care service after one reaches his or her deductible. Here's an example: A person has a $1,500 deductible and 20 percent coinsurance. For a $2,000 medical bill, the person would apply $1,500 toward their deductible. They've met their deductible with a $500 balance. The person would be expected to pay 20 percent of that or $100.

Copay: This is a fixed dollar amount paid for a health care service, usually when a person receives the service. The amount varies by the type of service such as a $30 copay for a doctor's appointment. A prescription copay also might be in play. Copays normally don’t count toward a deductible.

Saving money on medical bills has different bottom line results because it varies with deductibles and coinsurance.

Assume a patient has the option to pay $700 for an MRI with Facility A or $2,000 for an MRI with Facility B. Here are their potential cost savings:

Case 1: Patient has a $1,500 deductible with 20% coinsurance.

Option A: Pay $700

Option B: Pay $1,500 + $100 (coinsurance) = $1,600

Savings: $900

Case 2: Patient has a $5,000 deductible with 20% coinsurance

Option A: Pay $700

Option B: Pay $2,000

Savings: $1,300

Case 3: Patient has a $1,250 deductible with 20% coinsurance

Option A: Pay $700

Option B: Pay $1,250 + $150 (coinsurance) = $1,400

Savings: $700

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