Please Say What You Mean
About a generation ago it became fashionable to put fancy titles to common jobs. Janitor became maintenance engineer; stewardess became flight attendant; receptionist became front office administrator; used car salesman became transportation specialist. These days the health insurance companies have decided they want into the act. Most of them have begun misusing the term out-of-pocket maximum (OOPM). The result is that people are being confused and the insurance company continues a tradition of selling a confusing health policy.
Please tell me – when you hear an insurance company says the words out-of-pocket maximum what do you think? Silly question, you say? Of course, it’s the maximum of out-of-pocket that you will have to pay on your medical expenses. “Not so!” replies the insurance company. Are they purposefully trying to deceive people with that wording?
Using a real life example, let’s listen in to a conversation between an agent and his new customer.
Agent: “Ok, John, your new policy will have a $3,000 deductible and a $5,000 out-of-pocket maximum.”
John: “Great! So if I land in the hospital it will only cost me $5,000, right?”
Agent: “No, the $5,000 is your out-of-pocket maximum.”
John: “Isn’t that what I said?”
Agent: “If you land in the hospital it will cost you $8,000.”
John: “I thought you said my OOPM is $5,000.”
Agent: “It is!”
Get the idea? It’s like listening to Abbott and Costello doing their “Who’s on First?” comedy routine. See their hilarious skit here:
No More Confusing Health Policy Terms
Let’s set this straight. Other than copays and preventive care:
- The deductible is the amount you pay before the policy begins paying.
- Co-insurance is the amount you and the insurance company share in paying after the deductible. Generally, after the deductible the policy pays 80% and you pay 20%. Like the deductible, there is a limit set on coinsurance. This is now what they are calling OOPM.
- OOPM is – well, should be – the combination of your deductible AND the shared amount.
To avoid confusing a client and getting wrapped up in a Who’s on First dialog, I do not use the term OOPM as defined by insurance companies today. To do so would be like continuing a ruse.
I use the term Total Out-of-Pocket and I explain that it’s a combination of the deductible and coinsurance or shared amount. In a nutshell, all the client really wants to is how much it will cost them if they land in the hospital. Keep it simple.