All medical options will have a core deductible in 2010, including — for the first time — the Advantage HMO and Out-of-Area PPO. This deductible is separate from the MyHealth deductible of $500 individual, $1,000 family. You can receive a MyHealth deductible credit of $500 or $1,000 if you complete the MyHealth requirements by Nov. 13, 2009.

What is a deductible?

A deductible is an up-front, out-of-pocket, annual amount you pay before your medical coverage begins to pay for certain services. A deductible is generally applied to those services that have coinsurance-based benefits and not to those services when a copayment is required. Once the annual deductible has been met, the plan will pay a percentage of the remaining cost of services, in accordance with the medical plan option that you have chosen.

What is coinsurance?

This is the percentage of out-of-pocket costs for services that you would need to pay after you pay any deductible. For example, let's assume that you have met the 2010 MyHealth requirements, enrolled in the Advantage PPO, and have already met the plan's separate $250 individual deductible in 2010 by paying for certain services. If you then learn that you need to have surgery at a UPMC Advantage facility, the plan will pay 80 percent of the total cost of the surgery and hospital stay, and you would pay 20 percent of the total cost, up to the annual out-of-pocket maximum of $1,000. Your cost is based on 20 percent of the contracted rate that the UPMC facility has agreed to be paid by UPMC Health Plan for surgical and hospital services.

See the chart to the right for examples of services that are applied to the annual deductible and subject to coinsurance and other services that have a copayment. Copayments do not count toward deductibles, coinsurance, or out-of-pocket maximums, and are generally collected by the provider at time of service.

How does it work?

Let’s take a look at an example of how deductibles and copays work. If you have met your 2010 MyHealth requirements, under the Advantage HMO, if you see a specialist, you would pay a $30 copayment and not be charged any additional amount. If you have an inpatient hospital stay, you would pay the first $100 in charges and the remainder will be covered at 100 percent. Additionally, once you have paid the $100 deductible for any coinsurance-based services, no additional deductible will be charged for the remainder of the calendar year, for that individual.

If the cost of a medical service is applied to your deductible, you will generally not pay for it at the time you receive the service from your medical provider. In most cases, the provider will submit the claim to UPMC Health Plan, where it will be processed. Once the claim has been processed, the Health Plan will send an “explanation of benefits,” or EOB to you. See the EOB example and become familiar with the information that is shown and the sections on the EOB that include the charges that are your responsibility.

The provider will also receive a copy of the EOB. Once the provider receives this, they will send you a bill with the amount you will need to pay. This should match the amount shown that you owe on the EOB.

Reduce your taxes and keep more money for yourself

Keep in mind that deductibles, coinsurance, and copays can all be paid with pretax health care flexible spending account (FSA) dollars. 2010 may be a good year for you to begin participating in, or increase your contributions to the FSA, to help offset some of the out-of-pocket costs you may incur next year.