OOP

n   Health insurance plan defines an upper limit for the member expenses. This limit is called Out-of-Pocket (OOP). OOP is a combination of deductible, copay, and coinsurance.

n   After the OOP limit for a plan year is met, the member will not pay anything up till benefit maximum limit. The insurer will pay the medical expenses at 100%.

n   For example, Jim has a health insurance plan that specifies his maximum OOP as $2000 in a calendar year. He has paid this OOP expense by June. This means that for the remainder of the year if he has any covered medical expense, the insurer will pay the entire amount.

 Plans can be written to contain both individual and family OOP maximums

Exercise 1: Calculate the amount paid by a member in the following scenario:                    Billed Amount: $3000 Deductible: $500 Copay: $0 Coinsurance: 30% OOP: $700

Exercise 2: Calculate the amount paid by a member in the following scenario: Jennifer gets an asthma attack. She goes to the Cleveland Hospital for treatment. In her previous visit, she was also advised to get her diabetes checked. Copay for asthma is $10 and for diabetes is $15. However, the billed amount for asthma is $120. How much copay would Jennifer pay?

Exercise 3: Calculate the amount paid by the customer in the following scenario:                 Billed Amount: $5000 Deductible: $800 (300 met) Copay: $150 Coinsurance: 40% OOP: $2500

Exercise 4: Justin goes out of town for a business trip to New York. He experiences chest pain in the morning and decides to see a doctor. Justin uses an ambulance to go the hospital. The ambulance service costs him $300.The hospital that Justin visits is a non-network hospital, according to his insurance plan. He meets Dr. Wilson at the hospital who suggests surgery and some lab tests. The cost of the surgery is $4000.The lab tests, which were conducted in an out-of network independent lab, costs $600. After returning to his home town, Justin gets admitted in a network hospital costing $2000. Then, he takes some medicines from in network drug store  costing him $800. The various healthcare expenses as offered by Justin’s plan are: Deductible: $600 Coinsurance for In-network Facility: 10% Coinsurance for Out-network Facility: 30% Coinsurance for In-network Physician: 20% Coinsurance for Out-network Physician: 40% OOP: $3000 How much does Justin need to pay before he reaches the maximum OOP limit?

 When calculating the final payable amount, the different member expenses are applied in the following sequence:

1. Deductible
2. Copay
3. Coinsurance