November 2, 2019
Coinsurance, copays, deductibles, Health Insurance, Pre existing conditions
While preparing to leave for the US to pursue their higher education dreams, not many students seem to be aware about the importance of health insurance in the United States. While few have basic idea about the kind of health insurance that is offered by their respective universities, most others view it just as a statutory obligation for international students to purchase health insurance and nothing else.
Many students don’t even bother to have a look at the type of health insurance being offered to them, and those who do, hardly try to get into the fine print of the policy document.
In this blog, Student Cover brings to you the main difference between health insurance in the US and India.
Unlike India, it is mandatory for all those living in the US to have a health insurance cover. Before Patient Protection and Affordable Care Act (also nicknamed Obamacare) was passed by the US Congress, it was not mandatory for people to have a health insurance. However, sanction of the Affordable Care Act has made health insurance mandatory for all, including international students. In a year, a person can be without health insurance for not more than 3 months otherwise it will attract financial penalty.
Unlike Central Group Health Scheme (CGHS) in India and National Health Service (NHS) in the UK which is a public funded universal health scheme, or Ayushman Bharat scheme in India which is progressing towards providing universal health coverage to Indians, US does not have any such program. The government sponsored Medicare and Medicaid programs which provide health coverage to senior citizens, the disabled or those with low income are involuntary in nature and cover limited number of people. In case of any medical treatment, US citizens have to rely on their health insurance company for payment. Those who do not have any health insurance cover have to pay the medical bill from their own pocket.
When one buys health insurance in India, one can rest assured that in the event of any treatment, the entire medical bill, up to the sum assured, will be paid or reimbursed by the health insurance company. The insured does not have to share any percentage of cost with the insurance company. However, things are different in the US. There, health insurance companies do not pay the entire medical bill but only a major part of it. The remaining portion has to be paid by the insured person from his or her own pocket as Deductibles, Co-Pays and Co-Insurance.
Deductible: A deductible is the fixed amount insured pays for medical treatment. This amount is either has an Annual limit or a per injury/sickness limit. Let’s say a plan’s deductible is $500 per year. Insured will pay $500 as deductible for the all the medical bills. After this limit is reached Insured will not pay anything as deductible. Insured would be paying other elements under cost-sharing concept as decided under the schedule of benefits.
Co-insurance: Co-insurance is referred to the percentage of each medical bill amount to be paid by the insured. Generally, this percentage ranges from 10% to 50%. In the schedule of benefits, the percentage displayed is either the one to be paid by the insurance company or the one by the insured. This is totally at the discretion of the company.
For example, if your coinsurance given is 90%, that means that your insurer covers 90% of annual medical expenses and you pay the remaining 10%.
Co-payment: A Co-payment or co-pay (as commonly referred to) is a fixed payment for a covered service, paid when an individual receives particular medical treatments as mentioned in the schedule of benefits. Generally, co-pay is applied to each physician’s & emergency room visit and purchase of prescription drugs.
Out-of-pocket maximum: The maximum amount insured has to pay for covered services in a plan year. This amount is the addition of the amounts paid as Deductibles, Co-payments, and Co-insurance. After the out of pocket maximum pre-determined limit is reached the health plan pays 100% of the costs of covered benefits. This option is only available in plans that provide unlimited coverage.
Unlike India where pre-existing conditions are either not covered or have a long waiting period, health insurance plans in US, especially those that comply with Patient Protection and Affordable Care or Affordable Care Act (Obamacare), provide cover against diseases and conditions that the insured was suffering from at the time of purchasing the health insurance. In addition to that, almost all health insurance plans in US cover out-patient (OPD) treatment and provide compensation for it. Most of the health insurance plans do not provide this facility in India.
In US, the Affordable Care Act mandates those health insurance plans that comply with the Act should not have any limitation when it comes to the sum assured. In other words, insurance companies are legally bound to cover the treatment cost as per the insurance agreement, irrespective of the cost of treatment incurred over the policy period. Insurance companies can however limit the sum per treatment (per event).
For example, if an insurance policy provides unlimited coverage, it can limit the sum assured per treatment to $150,000 but it cannot restrict the number of treatments that an insured person can take in a given policy year. In India, there is no concept of unlimited coverage. Health insurance plans provide coverage up to a sum assured mentioned in the plan.
It was observed that the cost incurred by health insurance companies in financing treatment that prevent disease or sickness is much lower than that incurred in case of treatment of those diseases. Hence, health insurance plans in the US provide coverage for treatment undertaken by the insured person aimed at preventing the disease or sickness. This facility is not available in most health insurance plans in India. The preventive care coverage in India is limited to diagnostics and routine checkups.
We hope that through this blog, we are able to provide sufficient insight into the way health insurance functions in the US. Those students going to the US or any other foreign country for higher studies are advised to do a thorough research on healthcare and health insurance scenario of those countries.
Disclaimer: The blog is based on the data and research done by the blogger in his/her personal capacity. Readers are advised to exercise their own discretion while purchasing any insurance policy.
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