While it may be tempting to choose a health insurance plan based on monthly premium alone, be sure you understand all of the potential costs you’ll be responsible for, including deductibles, coinsurance, copays and the out-of-pocket maximum. You can also use our Plan Selector tool to see how some of these features influence your premium.
The deductible is the amount of charges you must pay before the plan begins to pay part or all of your costs. Usually, the higher the plan’s deductible, the lower the plan’s monthly premium. Depending on your plan and the amount of the deductible, you may not use enough medical services to meet your deductible in one year. But you should be sure you can afford to pay the deductible each year – just in case.
A plan with coinsurance generally requires you to pay a portion of the medical services you use (typically after you’ve met your deductible). For example, you pay 20 percent and your plan pays 80 percent. Coinsurance is usually 20 to 40 percent of the allowed amount for the service, depending on the plan selected. The allowed amount is how much a health plan determines is appropriate for a medical service or expense.
A copay is a payment you make, usually a fixed amount like $20, each time you visit the doctor or fill a prescription. Not all plans have copays.
The out-of-pocket maximum is the total amount you’ll be required to pay toward health care costs before your plan begins to pay 100 percent of all covered services during the calendar year. This is the amount you should be prepared to pay each year if you or a family member has a serious illness or injury.
In considering what plan is best for you, spend time upfront reviewing medical care you have received over the past couple of years. Use this amount to estimate your “total” costs for the year under the new plan. Add up your premium, anticipated deductible payments, coinsurance and other out-of-pocket costs. Make sure you can afford these costs.
In addition, you’ll want to consider the other services provided and the total value of the plan. See what to consider when choosing a plan.