When you have health insurance, you might assume that it will take the pressure off of finding affordable medical care. But that’s not always the case. Some plans are more affordable than others, and there are a number of costs associated with any type of health plan. These expenses include monthly premiums, deductibles, and other out-of-pocket costs that can add up quickly over time. Choosing the right plan can be crucial to saving you money.
Monthly Premium
The monthly premium is the cost of your health insurance plan. If your insurance is through your employer you probably are sharing the cost with them. Some employers can pay up to 100% but the average is 75% - 85%. The remaining balance is then deducted from your paychecks. If you purchase your plan from the marketplace exchange or from a private insurer you will pay the full premium.
Deductible
The amount that your insurer immediately deducts from your annual benefit is known as a deductible. No claims are paid by the company until you have paid that full amount out of pocket. Afterward, in accordance with the terms of your policy, the insurer will pay your expenses for the remainder of the year. Keep in mind you may still have copayments or coinsurance until the out-of-pocket maximum is met.
Out-of-Pocket Maximum
The out-of-pocket maximum (also known as OOP or maximum out-of-pocket) is the maximum amount you pay out of pocket for health care before your insurance kicks in. Once reached your insurance will pay 100% of covered medical expenses. Keep in mind your deductible, copayments, and coinsurance all count towards your max-out-of-pocket.
Copayment
The amount you will pay for a service such as a doctor's visit, urgent care, x-ray, and prescriptions. This is a fixed amount and will differ amongst each policy type. Some plans offer copayments to be made on a large variety of services and some on some of the basics. A copayment on one policy can be coinsurance on another.
Coinsurance
Just like a copayment, coinsurance is a set percentage you will pay for services provided. This can be an emergency room, ambulance, surgical procedure, or lab work. Typically you need to meet your deductible before your coinsurance takes effect. This means you may pay out of pocket for 100% until you meet your deductible. After meeting your deductible you will pay the coinsurance until you meet your out-of-pocket max.
Copayments and coinsurance can be different on each policy. For example, a doctor's visit may be a $30 copay on one policy but a 20% coinsurance on another. The structure of the plan will differ for each one. Some services will combine both and ask for coinsurance up front and then charge a copayment after the deductible is met.
What types of health insurance plans are there?
When shopping for health insurance plans you have a variety of options. These options will fall under a few categories, major medical and those that are not major medical. Major medal plans follow the compliance of the Affordable Care Act (ACA). These are your EPO, HMO, POS, and PPO types of networks. Government-sponsored plans such as Medicare and Medicaid also fall under major medical. Nonmajor medical will be types of insurance such as short-term, GAP, Accident, and critical illness. Read more: What types of health insurance plans are there?