Health care costs can be a significant component of many people’s budgets. Without insurance, they can quickly consume your savings and cause large gaps in their coverage, particularly if you don’t have any savings at all.
How much you pay for health coverage depends on the type and level of coverage you select. It also factors in your age, where you live and income level.
Premiums
Premiums are regular payments made to maintain your health care coverage. They may be paid monthly, quarterly or yearly depending on the type of plan you have.
When selecting health insurance, your premiums will depend on a number of factors including age, health status and the scope of coverage you select. Other elements to take into account when making your choice include copayments, deductibles and coinsurance amounts.
Save money with a high-deductible health insurance plan that requires you to meet a low deductible before the plan kicks in and pays for medical services. This strategy can be particularly cost effective if you’re healthy and don’t need many health care visits.
You may be able to reduce your premium by switching from an employer-sponsored plan to one sold on the Marketplace. These plans come from various insurers and may include health maintenance organizations (HMOs), preferred provider organizations (PPOs) or point-of-service (POS) options.
Deductibles
Deductibles are amounts that must be paid before health insurance coverage kicks in. Deductibles vary by plan.
High-deductible plans usually offer lower premiums than their low deductible counterparts, making them a good option for those who anticipate getting sick and needing frequent doctor visits.
Deductibles are typically set annually. Once you reach them, the insurance company starts covering your medical bills without deducting any copayments or coinsurance charges.
Copayments
A copayment is an amount you pay out-of-pocket for certain medical services. It varies based on the type of facility or service, as well as your insurance plan type.
Health maintenance organization (HMO) and preferred provider organization (PPO) plans typically come with higher copayment costs than other insurance types, but these expenses don’t usually affect your monthly premiums.
You will likely need to pay a copayment for doctor visits, hospital stays, emergency room visits and prescription medication. Generally, these payments must be made at the time of service at the medical facility or service.
Some copayments may be waived once your deductible has been met. This practice encourages people to visit their primary care physician more frequently and helps them better manage their health.
Coinsurance
By signing up for health insurance coverage, you are agreeing to share the cost of your care with your insurer. That includes copays, deductibles and coinsurance.
Typically, this applies when receiving a doctor’s visit or prescription; however, it may also cover other services like preventative visits and screenings.
The amount you pay for a copay, deductible or coinsurance depends on the policy; it’s typically expressed as a percentage and detailed in your health plan documents.
Most people subscribe to an 80/20 coinsurance plan, meaning they pay 20% of a covered medical charge and their health insurance company covers 80%. However, you may experience different coinsurance percentages or even be charged more if you utilize out-of-network providers.
