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.