Understanding Insurance Terms: What Deductibles, Copays, and Coverage Really Mean
Whether you’re picking up a CPAP machine, a hospital bed, or a mobility scooter, one of the most common questions we hear at HME Home Medical is:
“How much will insurance cover?”
The answer depends on several factors—including your diagnosis, your doctor’s documentation, and, importantly, the details of your insurance plan. But if you’ve ever looked at an explanation of benefits (EOB) and felt lost in a sea of confusing terms, you’re not alone.
This article breaks down the most common insurance terms you’ll encounter when navigating coverage for durable medical equipment (DME). Our goal is to help you understand what you’re seeing—and empower you to make informed decisions about your care.
Deductible
Your deductible is the amount you have to pay out of pocket each year before your insurance begins to pay for services.
Example: If your plan has a $1,000 deductible, you’ll pay 100% of the cost for covered services (including medical equipment) until you’ve spent $1,000. After that, your insurance will share the cost.
Copay
A copay is a fixed dollar amount you pay for a covered item or service. While copays are more common with doctor visits and prescriptions, some plans apply a copay to certain DME items or rentals.
Example: You may have a $50 copay for a wheelchair rental, due at the time of service.
Coinsurance
Instead of a fixed amount, coinsurance is a percentage you pay once your deductible is met. For DME, coinsurance is common and typically ranges from 10–30%.
Example: If your CPAP machine is $800 and your plan has 20% coinsurance, you would owe $160 after your deductible is met.
Out-of-Pocket Maximum
This is the most you’ll pay for covered healthcare in a plan year—including deductibles, copays, and coinsurance. Once you hit this limit, your insurance pays 100% of covered costs.
This cap can offer peace of mind—especially for patients who need long-term or high-cost equipment.
Prior Authorization
Some insurance plans require approval before they will cover a piece of equipment. This is known as prior authorization and it’s common for items like hospital beds or respiratory equipment.
At HME, we handle the prior authorization process for you when it’s required, working with your doctor and insurer to gather the necessary documentation.
Explanation of Benefits (EOB)
An EOB is not a bill—it’s a summary sent by your insurance company that shows:
-
What service or item was billed
-
How much the provider charged
-
What insurance paid
-
What you may still owe
It helps you understand how a claim was processed and alerts you to any issues.
In-Network vs. Out-of-Network
When a provider is in-network, they’ve agreed to a set payment rate with your insurance. This often means lower costs for you. HME Home Medical is in-network with many major plans in Northeast Wisconsin, but we always check eligibility for you in advance.
Assignment of Benefits (AOB)
When you sign an Assignment of Benefits form, it allows HME to bill your insurance directly and receive payment on your behalf. Without it, you may be required to pay up front and seek reimbursement yourself.
We make this part simple during the intake process.
How HME Supports You Through the Insurance Process
At HME Home Medical, we know that medical equipment needs often come at stressful times. That’s why our team is here to:
- Verify your insurance coverage
- Request authorizations when needed
- Work with your doctor to gather required paperwork
- Explain any costs clearly—before you commit
- Submit claims and help you understand your bill
You’re never just a number here. We take the time to answer your questions and help you get the equipment you need—with as little confusion as possible.
Still Have Questions?
That’s what we’re here for. Whether you’re preparing for a new diagnosis, replacing older equipment, or just trying to understand your plan, our team can help.
