Selecting an ideal health plan can have a dramatic impact on your out-of-pocket healthcare costs. To make an informed choice, estimate which services you require this year before making your choice.
Find the annual costs for different plans online or through your state Marketplace, or inquire with your employer regarding what offerings they provide to their employees.
1. Premiums
Premiums are payments you, a family member or employer make regularly to keep health insurance active and effective. Their costs depend on factors like your age, location and other rating criteria.
Health insurance companies compute premium rates based on how often members utilize services, the associated costs, as well as operational and funding expenses to enhance quality care.
As well as your premium, additional charges such as deductibles, copays or co-insurance may need to be covered before your insurer begins paying on your behalf. These fees come out of your own pocket before any reimbursement from insurer is provided for by them.
Mercer conducted a comprehensive employer survey and found that both deductibles and co-payments have increased, but premium increases may be more modest.
2. Co-pays
Co-pays are fixed amounts that you pay directly to your health care provider for health services, which vary depending on the plan you select and usually cover visits to family practitioners, specialists or urgent care centers.
If your deductible is high enough, a copay may only become payable after meeting it; other plans charge copays even before your deductible has been reached – making things confusing!
Co-pays may differ depending on where and when you receive health care, such as through in network providers or out of network providers. Copayments for inpatient hospital stays often apply; some plans charge them per-day while others only when your stay exceeds one day.
3. Co-insurance
Co-insurance or cost-sharing refers to the second part of your medical bill you owe before insurance begins paying its share. How much you owe depends on the type of plan and co-insurance rates.
Co-insurance percentages typically apply to all covered services; however, you may pay different amounts when visiting a primary care doctor, specialist and emergency room. Your insurer determines the co-insurance rate; once services have been rendered you should find it on your Explanation of Benefits (EOB).
Most health insurance plans feature a deductible amount you must first cover before your health insurer begins contributing its share. Once your deductible has been met, copays or coinsurance payments may continue until your out-of-pocket maximum for the year is reached.
4. Out-of-pocket expenses
Health insurance defines “out-of-pocket expenses” as any payments you must make out-of-pocket that may or may not be reimbursed by your employer, such as deductibles, copays and coinsurance payments.
As health insurance plans vary in terms of person, provider and location, out-of-pocket expenses can differ between plans. Therefore, it’s essential to understand how your out-of-pocket costs impact the healthcare services that can be afforded by each plan.
One important consideration is that health insurance does not cover many medical services at all, including dental and cosmetic surgery, non-prescription drugs and even dental hygiene services.
