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Understanding Out-of-Pocket Expenses for Travel Medical Insurance

  • Angela Borden
Dec 31, 2018

Insurance terms can be confusing at best, and many people don’t understand how certain terms work in relation to their travel medical insurance plan.

In this blog, we’ll explain premium, deductible, coinsurance, and medical maximum and how they work in relation to a claim.

Premium

This is a fancy word for the cost of the travel medical insurance plan. It is the amount you pay upfront when you buy the insurance plan. It's affected by the length of your trip, your age, and the deductible and medical maximum you choose during the purchase process.

Generally, the longer your trip and the older you are, the more you will pay. 

If you choose a higher deductible, this will lower the amount of your premium, because you will pay more when you make a claim. At claim time, you pay your deductible before the insurance company pays anything.

Likewise, if you choose a lower deductible, this will increase the premium amount. Why? Because you will pay less toward your claim with a smaller deductible.    

If you choose a higher medical maximum, this will increase your premium because you are increasing the amount of coverage you have.

Deductible

When you file a claim, this is the amount of money you pay before any payment is made by the insurance company. You choose your deductible amount when you are in the process of purchasing your travel insurance plan. Options for our travel medical insurance plans range from $0 to $5,000.

With a lower deductible you pay less upfront toward your claim, so this increases your premium, or cost of your insurance plan. And, when you increase your deductible, the cost of your insurance plan falls.   

Coinsurance

This is a payment you share with the insurance company. When you file a claim, you pay this amount after you pay your deductible, if you have one. (Remember, $0 is an option on our travel medical insurance plans!). Coinsurance is shown as a percentage, with you paying the smaller of the two amounts.  

For example, if your coinsurance is 80/20 for the first $5,000, that means you pay 20% of the first $5,000 of expenses, and the insurance company pays the remaining 80%.

Medical Maximum

This is the amount the insurance company pays for any sickness or injury that occurs while you are traveling and covered by the plan. Think of it as a giant bucket, and medical expenses like hospital room and board, outpatient hospital, emergency room, doctor office visit, prescription drugs, and ambulance are all paid out of that bucket. If your expenses total more than your medical maximum, they will not be covered. 

Medical maximum options range from $50,000 to $5,000,000 for our Liaison travel medical insurance plans

Also, it's important to note that emergency medical evacuations on the Liaison plans are paid for in addition to your medical maximum. That can make a big difference if you need to be evacuated.  

The lower your medical maximum, the lower your premium. Likewise, the higher your medical maximum, the higher your premium.

Example Claim

Here’s an example of how the deductible, coinsurance and medical maximum work for a travel medical insurance claim.

Your claim —You break your leg while traveling to the United States, and your medical expenses total $20,000.
You purchased a Liaison Choice travel medical plan with:

  • $100 deductible.
  • 90/10 coinsurance for the first $5,000 in medical expenses.
  • $1,000,000 medical maximum.

First, you pay $100 for the deductible. That leaves a balance of $19,900 ($20,000 — $100 = $19,900).

Next is the coinsurance. You pay 10% of the first $5,000, or $500. Then, the insurance company pays the remaining 90%, or $4,500 ($5,000 x .90 = $4,500).

Subtract the $500 and the $4,500 from $19,900, and $14,900 is left. The insurance company pays this amount. 

To summarize, you pay $600 ($100 for the deductible + $500 for coinsurance = $600).  

Then the insurance company pays $19,400 ($4,500 coinsurance + $14,900). 

If you are considering buying a travel medical insurance plan and have questions about any of the above topics, contact our inside sales team at sales@sevencorners.com or your agent for help. 

If you have questions about a claim or benefits on a travel medical plan you already purchased, contact our customer service team at claims@sevencorners.com  

About the Author

angela borden

Angela Borden has been a member of the Seven Corners team since 2007. She originally joined as an underwriter, later transitioning to marketing to explore her passion for making all things insurance less confusing and more fun. (Is that possible?) When she's not working, Angela loves traveling and spending time with her family, including her two adorable dogs.

Read more of Angela’s blogs

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