Understanding what you pay when you have a health plan can be confusing, especially when you’re not familiar with the lingo. You hear the terms – premiums, copays, and deductibles – but you may ask, “What does all of that mean to me?”
At the most basic level, costs you may pay include: your monthly premium, plus your deductible, copays and coinsurance. When you reach your out-of-pocket maximum, (which consists of the deductibles, copays and coinsurance you pay up front), then your plan pays 100% of your covered medical costs.
Monthly Premium
This is your monthly fee to have a health plan. In general, the lower your premium, the higher your share of the costs for medical care. Your premium is based on your age, location, number of people on the plan, and tobacco use. It will also change annually, coinciding with the date on which your plan starts or renews.
Deductible
A deductible is what you pay “out of pocket” before your health plan starts to pay. There’s an exception, because with some plans you will share the cost of some services such as doctor visits and prescriptions even before you meet your deductible. (To determine if your plan works this way, check your plan summary, or call customer service.)
Your deductible depends on the plan you choose; only care you receive by “in-network” healthcare providers will count towards it. Once you meet your deductible, your health plan pays for most in-network medical care costs for the rest of the plan year, and you pay a smaller share. Typically, the higher your deductible, the lower your monthly premium.
Copay
A copay is a fixed amount you pay each time you receive healthcare, such as going to the doctor or filling a prescription. Some plans (such as high-deductible HSA plans) don’t have copays. For 2016 with most Premera gold and silver individual plans, your first two doctor visits (in addition to preventive checkups) are also covered in full – no copay.
Coinsurance
When you choose a specific plan, you agree to share the cost of services. Coinsurance is a percentage you pay toward the cost of your care after you meet your deductible. For example, you may pay 20 percent while your plan pays 80 percent. This amount is based on the type of plan you choose. Learn more about individual plan selection in this brief video.
Out-of-pocket maximum (OOP)
This is the most you pay for in-network healthcare services in a year. Costs you pay (like deductible, copays and coinsurance) from in-network care count toward your out-of-pocket maximum. Your monthly premium does not. Once you reach that limit, your health plan will pay 100 percent of your in-network healthcare expenses for the remainder of the plan year.
The out-of-pocket maximum is an important number to consider. If something bad happens to you, such as a serious illness or accident, it caps your financial liability by limiting the amount you could pay for in-network care. Under the Affordable Care Act (“Obamacare”), the 2016 out-of-pocket maximum can be no more than $6,850 ($13,700 for families).
As you consider your health plan options, review these basics so you can compare what you’ll pay with the coverage you may want. It’s also smart to keep in mind what you anticipate for healthcare in the coming year. And remember, most plans cover services meant to keep you healthy-such as preventive and primary care-at little or no up-front cost to you.
