How Much Health Insurance Costs
Health insurance is a necessary expense for anyone who wants to avoid breaking the bank when medical expenses arise. Depending on the type of coverage, there are typically costs associated with accessing care that are captured by deductibles and copays.
These are the key factors that determine how much health insurance costs.
Whether you buy your insurance through an employer or on the exchange, premiums are a key part of any health plan. They cover the costs of operating the insurer and set aside reserves. Premiums are also impacted by changes in the law and what it costs to deliver healthcare services. In addition to the premium, you may owe copayments or coinsurance when using your coverage. Copayments are flat dollar amounts, while coinsurance is a percentage of the cost of care.
Regardless of the type of health insurance you have, it is essential to understand the factors that influence health insurance costs. These factors include: age, location, the number of people on the policy, and the deductible. Health insurance premiums have increased over time, while incomes have not kept pace, so workers are paying a higher percentage of their household budget for healthcare costs. It is important to make sure you have the right kind of health insurance to keep your family covered.
Deductibles are the amount of money you pay each year before your insurance starts paying for care. This includes doctor visits, tests and procedures like an MRI. Some health plans have an annual deductible for each individual covered on the policy, while others have an aggregate family deductible, where the insurance company won’t start covering bills until all members have met the deductible.
Let’s say Trish falls off a ladder while changing a light bulb and breaks her arm. She goes to the emergency room, where she pays $2,100 for exams, X-rays and a cast. She meets her deductible by paying the $800 she contributed to her plan, and then her insurance begins paying 80 percent of her ER expenses until she hits her out-of-pocket maximum. That’s why it’s important to look at the cost of a health plan based on the deductible and copays, not just the monthly premium. That way you can select a plan with a deductible that fits your budget.
Copays are fees that you pay for a covered health care service, like an office visit or prescription drug. Copayments vary by plan. They might be a flat amount, such as $20 for a doctor’s visit, or a percentage of the cost of the service, such as 20%. Some services don’t require a copay, including annual checkups, immunizations and well-woman visits. Check your policy for details.
Copays are usually separate from the deductible, which is an amount you must pay each year before your health insurance starts paying for care. You can find out how much your deductible is by looking at the summary of benefits and coverage in your health insurance plan documents or in your online member portal. You might also have a flexible spending account, health reimbursement arrangement or health savings account that helps you pay for medical costs. These accounts have their own deductibles and maximum out-of-pocket limits. You can learn more about these accounts here.
The amount of money you pay for medical services before your insurance begins to pay. This fee is often a percentage of the cost and may or may not count toward meeting your deductible. For example, a coinsurance rate of 20% of the approved cost of a treatment means you pay 20 percent and the insurance company pays 80 percent.
Premiums, copayments and deductibles are all part of your health plan’s cost-sharing features. Depending on the plan you choose, these costs can add up quickly. Some people opt for plans with higher deductibles and coinsurance rates to lower their monthly costs. Others prefer plans with lower deductibles and out-of-pocket maximums to avoid paying more for care.
A max out-of-pocket limit is the most you can spend on health care expenses in a given year after you have paid your deductible, copayments and coinsurance. This does not include your premiums. It also does not include the cost of non-covered health care.