Breaking Down Out-of-Pocket Costs for Health Insurance

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Every health insurance plan comes with various out-of-pocket costs. Each insurance plan can cover 10-100% of health costs incurred over the course of the year. Regardless of the plan coverage, there will always be costs you have to pay.

Sometimes, preventative is covered 100%, and payments are required when you have an accident or get sick. Each plan specifies how much you pay in premiums, deductibles, coinsurance, and copays.

Jonathan Nolan

JPN Insurance Services

Understanding Out-of-Pocket Health Insurance Costs

Let’s talk about the definitions and instances in which each of these costs come into play:

  • Premium: The premium is what you pay to keep the plan active throughout the year. Some employers cover part of this cost, so your out-of-pocket payment would be whatever is left after your employer’s contribution.
  • Deductible: The deductible is the amount you agree to pay over the course of a year before the insurance starts to pay for your bills. If it is preventable care, it is usually covered even before you meet your deductible.
  • Coinsurance: Once the insurance starts to pay for your medical costs, the coinsurance is the agreed-upon percentage that insurance covers. For example, some plans are 80/20, where insurance pays 80%, and you pay 20%.
  • Copay: Anytime you visit the doctor outside of preventative care or pick up a prescription, your plan may require a copay somewhere around $10-$50. The copays do add up and go toward your deductible.
  • Out-of-Pocket Max: Most health insurance plans have an out-of-pocket maximum. Say you have incurred enough medical bills that you are still paying thousands of dollars even after the insurance company pays their 80%. In that case, your insurance company will take over all payments after you reach your out-of-pocket max.

When you know about each out-of-pocket cost, you can choose the right plan for your situation. For example, if you are relatively healthy, you may choose a plan with a lower premium and higher deductible. On the other hand, a low-deductible plan with lower copays can be wise if you have a chronic illness requiring specialty care.

If you have further questions about the best plan for you regarding out-of-pocket costs, you can meet with a member of our team to discuss. Call us at JPN Insurance Services to learn about the various plans that are available: (951) 443-9925