How Does a Flexible Spending Account Work with Coinsurance?
Health insurance has become a complicated enterprise. Some commonly used terms like copay, deductible, coinsurance, and flexible spending account may not be so common to the typical consumer. We will explore how does a flexible spending account work, and what is coinsurance.
How does a flexible spending account work?
A Flexible Spending Account, or FSA, lets you set aside money for medical expenses. Since your employer removes the funds from your paycheck before taxes, you realize the tax savings. You and your employer can add money to the account up to the limits outlined by the IRS. It is important to note that the money in a Flexible Spending Account must be used by the end of the year, otherwise your employer can keep the unused funds. Some employers may let you to pay expenses for the previous two months or roll over $500 to the next year. Each year you must re-enroll in the FSA program. You will also need to:
- Find out what your employer’s contribution will be
- Estimate how much you will spend on medical care this year
- Decide on the amount you want deducted from your paycheck each month for your FSA
You can use the funds in your flexible spending account one of two ways. You can either use the provided debit or credit card or use your own money and send in receipts for reimbursement.
How does a flexible spending account work with coinsurance?
Many people confuse copay with coinsurance. They are very different things in the health insurance industry. A copay is a flat rate you pay when you see a doctor or receive other medical treatment. Coinsurance is the amount you are responsible for after you have met the deductible. There are three phases in health insurance:
- Deductible phase: you have not yet met your deductible
- Coinsurance phase: you pay a certain percentage for your care
- Out-of-pocket maximum phase: your insurance company covers all the charges
Once you are in the coinsurance phase, you and your health insurance company are now sharing the cost of treatment at a set percentage rate. You can use your FSA to cover this additional cost for your health care needs.
At Colorado Springs Orthopaedic Group, we accept all major insurance carriers as well as Flexible Spending Account payments. You can visit our offices for all of your orthopedic needs. When you require urgent orthopedic care, come to our Express Care Clinic for immediate help for your injury.