Is your head spinning from trying to figure out how much you can expect to pay in health insurance costs? Would you rather pop a few aspirin and collapse on the couch? Don’t worry—figuring out health insurance can be exhausting for everyone. We’ve broken down the ins and outs of health insurance costs. Let us help make this a little simpler for you.
We get it. Few of us are fluent in health insurance lingo. In fact, a 2014 Kaiser Family Foundation survey found that nearly 40 percent of Americans don’t understand basic terms related to the costs of health insurance. Even fewer are able to figure out certain expenses like the anticipated cost of a hospital stay.
The good news is that you don’t need a medical degree or even a Ph.D. in health care to understand how much you’ll be on the hook for when you need medical care. Instead, familiarize yourself with these key terms that play big roles in determining health insurance costs:
Premium: A premium refers to the amount that you pay each year for health insurance coverage. You typically make monthly payments toward this annual premium fee. Since this is insurance, you must pay this amount regardless of whether you actually use any medical services throughout the year.
Copayment: A copayment, or copay, is a flat fee that you pay at the time you receive a health care service. On some health plans, trips to the emergency room, pharmacy or doctor’s office may require a copayment. Copay amounts vary depending on the insurance plan as well as the service type. For instance, your copay may be higher for a trip to urgent care than to your doctor’s office.
Deductible: A deductible is the amount of money you must pay per family member each year for health care services and prescriptions before your insurance plan kicks in. For example, if you have a health insurance plan with a $2,500 per-person annual deductible, you are expected to pay for that family member’s doctor visits, medications, medical tests, surgical procedures and other medical expenses until you have reached the full deductible amount of $2,500. Once you have fully contributed to your annual deductible, your health insurance company will pay at least some portion for covered health care services for the remainder of the year for that family member.
Coinsurance: Many health insurance plans require that you pay for a portion of the health care services you receive, which is called coinsurance. This coinsurance amount is often set as a percentage. For instance, if you have an 80/20 health insurance plan, your plan will pay 80 percent of medical costs and you will pay the remaining 20 percent. Coinsurance fees are higher if you use a provider that is not within your health plan’s covered network.
Out-of-Pocket Costs: Out-of-pocket health insurance costs refer to any non-reimbursable expenses you pay for covered medical care, such as deductibles, copayments and coinsurance. Most health insurance companies set a maximum amount for yearly out-of-pocket expenses. Once you reach the out-of-pocket maximum, the plan pays for 100 percent of the allowed covered expenses, copayments and coinsurance. Most health insurance companies set a maximum amount for yearly out-of-pocket expenses. Once you reach the out-of-pocket maximum, the plan pays for 100 percent of the allowed covered expenses.
The Henry J. Kaiser Family Foundation. Assessing Americans’ Familiarity with Health Insurance Terms and Concepts. Available at: kff.org/health-reform/poll-finding/assessing-americansfamiliarity- with-health-insurance-terms-and-concepts/. Accessed June 22, 2016.
The Henry J. Kaiser Family Foundation. More Than Four in Ten Uninsured Don’t Know Basic Health Insurance Terms, Fewer Understand Complex Coverage Concepts. Available at: kff.org/ health-reform/press-release/more-than-four-in-ten-uninsured-dont-know-basic-health-insurance-terms-fewer-understand-complex-coverage-concepts/. Accessed June 22, 2016.
Content is for general informational purposes only and not intended to be medical advice or a substitute for professional health care.