Insuring a Bright Future

A copay (or co payment) is a flat fee that you pay on the spot each time you go to your doctor or fill a prescription. For example, if you hurt your back and go see your doctor, or you need a refill of your child's asthma medicine, the amount you pay for that visit or medicine is your copay. Your copay amount is printed right on your health plan ID card. Copay s cover your portion of the cost of a doctor's visit or medication.

Do I always have a copay? 

Not necessarily. Not all plans use copay s to share in the cost of covered expenses. Or, some plans may use both copay s and a deductible/coinsurance, depending on the type of covered service. Also, some services may be covered at no out-of-pocket cost to you, such as annual checkups and certain other preventive care services.

What is a deductible?

A deductible is the amount you pay each year for most eligible medical services or medications before your health plan begins to share in the cost of covered services. For example, if you have a $2,000 yearly deductible, you'll need to pay the first $2,000 of your total eligible medical costs before your plan helps to pay.

Costs that typically count toward deductible**

• Bills for hospitalization
• Surgery
• Lab Tests
• MRIs and CAT scans
• Anesthesia
• Doctor and therapist visits not covered by a copay
• Medical devices such as pacemakers

Cost that don’t count

• Copay s (typically)
• Premium payment
• Any costs not covered by your plan.

Deductibles for family coverage and individual coverage are different. Even if your plan includes out-of-network benefits, your deductible amount will typically be much lower if you use in-network doctors and hospitals.

How do I decide what deductible amount to choose?

If you're mostly healthy and don't expect to need costly medical services during the year, a plan that has a higher deductible and lower premium may be a good choice for you.

On the other hand, let's say you know you have a medical condition that will need care. Or you have an active family with children who play sports. A plan with a lower deductible and higher premium that pays for a greater percent of your medical costs may be better for you.

What is  coinsurance?

Coinsurance is a portion of the medical cost you pay after your deductible has been met. Coinsurance is a way of saying that you and your insurance carrier each pay a share of eligible costs that add up to 100 percent.

For example, if your coinsurance is 20 percent, you pay 20 percent of the cost of your covered medical bills. Your health insurance plan will pay the other 80 percent. If you meet your annual deductible in June, and need an MRI in July, it is covered by coinsurance. If the covered charges for an MRI are $2,000 and your coinsurance is 20 percent, you need to pay $400 ($2,000 x 20%). Your insurance company or health plan pays the other $1,600. The higher your coinsurance percentage, the higher your share of the cost is. You are also responsible for any charges that are not covered by the health plan, such as charges that exceed the plan’s Maximum Reimbursable Charge.

What is an out-of-pocket maximum?

Out-of-pocket maximum is the most you could pay for covered medical expenses in a year. This amount includes money you spend on deductibles, copay s, and coinsurance. Once you reach your annual out-of-pocket maximum, your health plan will pay your covered medical and prescription costs for the rest of the year.

Here’s an example. ** You have a plan with a $3,000 annual deductible and 20% coinsurance with a $6,350 out-of-pocket maximum. You haven’t had any medical expenses all year, but then you need surgery and a few days in the hospital. That hospital bill might be $150,000.

You will pay the first $3,000 of your hospital bill as your deductible. Then, your coinsurance kicks in. The health plan pays 80% of your covered medical expenses. You'll be responsible for payment of 20% of those expenses until the remaining $3,350 of your annual $6,350 out-of-pocket maximum is met. Then, the plan covers 100% of your remaining eligible medical expenses for that calendar year.

Depending on your plan, the numbers will vary—but you get the idea. In this scenario, your $6,350 out-of-pocket maximum is much less than a $150,000 hospital bill!

The distinction between an employee and an independent contractor is an important one for the IRS because it affects withholding of federal income tax and FICA taxes for (Social Security and Medicare).

Employees have federal income tax and FICA taxes withheld from their pay, and employers must also make payments for these taxes.  Independent contractors or self-employed persons are responsible for calculating any payment received as a result of work and paying their own federal  income and FICA taxes for (Social Security and Medicare).  

 What Is General Liability Insurance?

General liability insurance is a type of small business insurance that pays other people when you’re legally liable for their injury or damage to their property.

Financial lenders, landlords, licensing boards and business clients might require you to have general liability insurance, so it’s important for your business.

What Does General Liability Insurance Cover?

General liability insurance covers your business if there are claims for bodily injury or property damage. If your business is sued, it pays for your lawyer costs, court costs, judgments and settlements involving claims covered by your policy. Here’s more about what general liability insurance covers.

Bodily injuries caused by your business.

Bodily injuries caused by your business operations are covered by general liability insurance. For example, it can pay for a customer’s medical bills if the customer is injured on your business property. If the customer sues your business, general liability insurance also pays your legal defense costs.

Property damage caused by your business.

A property damage liability claim could be caused by an employee damaging a customer’s laptop, for example, or an outdoor sign that falls on a customer’s car. If a customer’s property is damaged because of your business, the customer can make a claim and general liability insurance will cover it.

Personal injury

“Personal injury” in the context of liability insurance is not a physical injury. Instead, personal injury refers to issues such as slander and libel. These are covered as a standard part of general liability insurance.

General liability insurance would cover a copyright violation in a business ad or harming someone’s reputation. For example, suppose you use artwork for a business advertisement without permission or you said something negative in a media interview about another business that harms their reputation. You may be guilty of advertising injury in those cases.

Business liability insurance does not cover workplace injuries to employees or other people on your company payroll. Workers compensation insurance covers workplace injuries.

What Is a BOP?

A business owners insurance policy (BOP) typically combines general liability, commercial property insurance and business interruption insurance into one policy.

Here’s what you get in a BOP.

1. General liability insurance

This covers a business in case of claims about bodily injury, property damage and personal injury. If you’re sued over one of these problems, general liability insurance pays for your legal defense and any settlements or court judgments—up to the liability limit of the policy.

2. Commercial property insurance

The commercial property insurance part of a BOP pays out if your business’s building, equipment, furniture or inventory are damaged. This may include property your business owns, leases or rents. It also covers repairs and replacing items that are stolen or damaged.

3. Business interruption insurance

Business interruption insurance, sometimes called business income insurance, replaces lost income from your business if you need to temporarily shut down due to a problem covered by the policy, such as a fire or windstorm. This coverage doesn’t pay for lost income due to a problem not covered by the policy, such as flooding (you’ll need to buy extra coverage for flood-related problems).

A Business Owners Policy, can also pay out to cover loss of income and expenses like rent and payroll. Depending on the insurer, a BOP could contain additional coverage types. For instance, Travelers provides optional coverage types like cyber liability, contractor’s equipment and hired and non-hired auto.

What you need to qualify for a BOP?

Insurance companies consider several factors when determining if a business is eligible for a BOP, including the size of its primary location, type of business and revenue. Insurance companies also may consider the financial stability of the business, the building’s construction, security features and fire hazards.

Not sure which policy to buy for your business? Here's a side -by-side look at how general liability insurance compares to a BOP.

General liability insurance:

• Covers claims against your business for injuries to other persons and damage to other persons property.
• Does not cover property damage for your business location.
• Does not provide business interruption insurance.

Business Owners Insurance:

• Covers claims against your business for injuries and property damage.
• Covers property damage for your business location.
• Provides business interruption insurance.  

Source: Forbes advisor.