It is important to understand what your out of pocket expenses will be when you buy any kind of medical insurance.

This article relates to the following types of medical insurance, as well as other similar coverages.

• Visitors Insurance for USA
• Travel Health Insurance for Outside USA
• Schengen Visa Insurance
• New Immigrants Health Insurance
• International Student Insurance
• J Visa Insurance

So, what does out-of-pocket mean in health insurance?

Well, many people mistakenly believe that once they pay the premium for international health insurance, everything else will be covered after that; however, there are other costs that you will have to pay in case of sickness or injury after purchasing the insurance. These are out of pocket expenses. You should carefully review the provisions of the travel medical insurance plan you are purchasing to make sure you will have adequate coverage.

Premium

The premium is the cost of purchasing the insurance, which you pay at the time of buying the insurance. Most plans require you to make an upfront payment for the entire duration you would like to be covered. Many plans allow you to purchase for a shorter duration and extend coverage up to a certain total duration. A few plans (especially some of international student insurance plans) allow you to pay in monthly installments.

Deductible

A deductible is the amount you would pay generally before the insurance company pays for anything. Depending on the plan, the deductible can vary anywhere from $0 to $5,000. The deductible can be either per incident, per policy period, or per year. Very few plans waive the deductible, and only for very specific scenarios.

Coinsurance

After you pay the full deductible, the insurance company will pay a percentage of the expenses (such as 80% or 90%) and you will pay the remaining amount. After certain combined amount (such as $5,000 or $10,000) is reached, the insurance company will pay 100% up to the policy maximum.

If you purchase a fixed coverage plan, coinsurance concept does not apply. The insurance company will pay only the fixed amount for each and every procedure, and you will have to pay the difference beyond that out of your pocket.

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Copay

Generally, there is no concept of copay in short term international health insurance plans. Copay is a fixed amount (such as $25 or $40) that you would pay for each visit to a medical facility or a physician.

Exceptions:

• For US urgent care visits, in few plans, there is a copay (such as $15, $25, $30 etc.) and the deductible is waived. If you choose a $0 deductible, then there is no copay.
• Some of the student insurance plans have a $5 copay for visits to the Student Health Center.

ER Penalty

In order to discourage people using the emergency room (ER) for minor sicknesses, some insurance companies impose a penalty of $200 or $250 if the visit to the ER is for a sickness that does not result in hospital admission.

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Policy Maximum

Even the best travel medical insurance plans don't have an unlimited policy maximum. The insurance company pays for eligible medical expenses up to the chosen policy maximum, such as $50,000, $100,000, $500,000 or higher (available policy maximum varies by plan). If you incur any expenses beyond that amount, you will have to pay all the expenses out of your pocket. Choosing a higher policy maximum at the time of initial purchase is very important because it is not possible to increase the policy maximum after the person needs treatment, or is hospitalized due to a sickness or injured.

Out of Pocket Maximum

If you purchase a fixed coverage plan, there is no out of pocket maximum as the insurance company will only pay the fixed amount and you will be responsible for all amounts beyond that.

For comprehensive coverage plans, the out of pocket maximum is roughly determined based on the deductible and the coinsurance amounts.

Uncovered Expenses

Short term international health insurance plans are not major medical plans and don't cover everything. If you incur any expenses for uncovered conditions or treatments like maternity, preventive care, routine care of pre-existing conditions, birth control, abortion, mental conditions, alcohol or drug abuse or anything else that may be excluded, you will have to pay the expenses incurred out of your own pocket.