How health plans work

A health plan helps you manage the high costs of health care. It paysmany of the expenses for doctor visits, hospital stays, prescription drugs and preventive care.

You can choose from a variety of plans with premiums (rates) to fit your budget and with different levels of coverage depending on your needs. 

A health plan example

Let’s say you’ve had a serious accident.  Medical expenses are $50,000.  Your heath plan makes a huge difference in the amount you'll pay. 

A sample health plan

  • Annual deductible: $5,000
  • Coinsurance: 20%
  • Annual out-of-pocket maximum: $6,000

How it works

1. In this example, you pay the first $5,000 in medical costs (your deductible) before your plan starts paying.

2. After that, you're responsible for 20 percent.  In other words, you only pay $2 of every $10 in covered expenses until you reach the $6,000.

3. Your health plan then pays all the rest of your covered expenses for the year, no matter how high they are.

The costs for this example

  • Total $50,000You pay: $6,000 maximum
  • Your health insurance pays: $44,000

Definitions

Copay: A set price for some services (for example, $25 per office visit).  Some plans don't have a copay.

Deductible: The amount you pay for covered medical expenses each year before your health plan begins to pay.

Coinsurance: The costs you and your health plan share.  For example, you pay 20 percent of the cost of a doctor's office visit or hospital stay, and your plan pays the other 80 percent.  (Some plans do not have coinsurance.)

Health savings account:  Your pre-tax contributions to your HSA account can help you save when you use it to pay for covered expenses.

Out-of-pocket maximum: The most you have to pay for covered medical expenses in a year.

Premium: The monthly amount you pay for your health plan.  Usually a lower premium gives you a higher deductible.  See our many individual and family plans and select the plan that works best for you.

 

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