Dear Addy: Max Out-of-Pocket

Dear Addy
Note: This article was updated on 11/10/2015 to reflect 2016 out of pocket maximum limits.
Dear Addy,
I’m a confused individual with private health insurance. I read that under the Affordable Care Act (ACA) the maximum annual out-of-pocket cost for health care is $6,850.00 for an individual. My insurance company is moving my factor medication from major medical coverage to pharmacy coverage. Right now there is a copay for my factor, but in January I will have to pay co-insurance. What is the difference between copay and co-insurance and is it possible that I would owe the full $6,850 in the first month that my policy takes effect?
Fearful of Empty Pockets
Dear Fearful,
First, a copay is a fixed amount you pay for a healthcare service or when you get a prescription filled. Coinsurance, on the other hand, is your share of the costs for a healthcare service or medication. Coinsurance is usually a percentage of the total cost for the service or medication.
Lately, there is a trend in health insurance where medications, like factor, are being moved from major medical coverage to pharmacy coverage. Many insurers are doing this to increase the patient’s share of the cost of certain medications.
Because factor is considered a specialty drug, it is often placed on a specialty tier in an insurer’s drug formulary under pharmacy coverage. You can learn more about specialty tiers and their impact on patients on HFA’s website. Placing medications on a specialty tier allows an insurer to charge coinsurance for factor.
Unfortunately, it is possible for you to be required to pay the full $6,850 maximum annual out-of-pocket in the first month your insurance policy is effective (or $13,700 if you’re on a family plan). Some people taking high cost medications like factor may have to pay a deductible in addition to a copayment and coinsurance. The cost of healthcare and medication for some people can easily total over $6,850 in a month depending on their circumstances. Many states are looking at legislation that will allow consumers who reach their out-of-pocket limit for healthcare costs in one month to pay down their balance over 12-24 months.
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HFA frequently receives questions from the bleeding disorders community related to advocacy issues. The questions often impact the entire community. In an effort to reach the largest audience possible with our responses to these widely applicable questions, HFA developed “Dear Addy.” Questions submitted to this column are edited in order to protect privacy and should be considered educational only, not individual guidance.