Understanding Cost vs. Coverage

Balancing what you can afford and the health insurance coverage you need is the key to finding the right plan. To help you in your decision making process, here’s a look at the basics of health insurance costs and coverage.

Cost is more than what you pay every month for your health insurance. Factors that make up the cost of insurance include the following:  

Deductible – The amount you’re responsible for paying for covered medical expenses before your health plan begins to pay each year.

For example, say you get into a car accident and your hospital bill is $10,000, while your deductible is $2,000. That means you have to pay $2,000, while your insurance company pays the remaining $8,000.  

Copay – These are set prices for some services. For example, a plan may require a $10 copay for a visit to your primary care physician and a $20 copy to see a specialist. Not all plans have copays.  

Coinsurance – These are the shared costs between you and your health plan. For instance, you may be required to pay 20% of your covered medical costs and your plan pays 80%. Not all health insurance plans have coinsurance.  

Premium – The amount you pay for an insurance policy. All of the above factors along with your coverage impact how high or low your monthly cost will be.  

So, your premium + the deductible + copayments + coinsurance = the most you will pay for healthcare each year (for covered services). Here’s an example:  

Sample Plan:  

  • Deductible: $3,000  
  • Coinsurance: 15% 
  • Out-of-pocket maximum: $5,000  

How it Works:  

  1. In the example above, you would be responsible for paying for the first $3,000 of your covered medical expenses. This is your deductible.  
  2. Once that’s paid, you would be responsible for 15% of your covered medical expenses. This is your coinsurance. In this example, your coinsurance costs would be $2,000. Your health insurance plan will cover the remaining 85%, or $3,000.  
  3. Once you hit the $5,000 out-of-pocket maximum, your insurance will pay for the rest of your covered medical expenses for the year, except for copays. 

You’ve probably heard the terms “in-network” and “out-of-network.” But what do these really mean? And how do they impact you?

In-network

A network is a large group of healthcare providers, doctors, hospitals, pharmacies, etc. And instead of charging you regular rates, they’ll charge you lower fees that have been negotiated by your insurance company.

How this impacts you: Make sure your doctors (primary care and specialists) are in-network. This way, you will be charged the discounted rate.

Out-of-Network

With out-of-network providers, your insurance company doesn’t have a discounted rate. So those doctors, specialists and facilities can charge any amount.

How this impacts you: You will likely pay higher out-of-pocket costs to see out-of-network providers.

Not Covered

Services not covered are those that your insurance plan will not pay for in any way. So you will be required to bear 100% of the cost.

How this impacts you: Before purchasing a plan, check for services that are not covered. So, for instance, if you are planning a family and maternity care is not covered in your plan, it can mean a higher cost for you.

Free Services

Some services, such as preventive ser vices, are covered in full by health insurance plans.

How this impacts you: Check for discounts, free services and tools your insurance plan comes so you can save money and achieve your health and wellness goals.

There are many steps you can take to lower the cost of health insurance, including:

  • Doing your research first to select the plan that works best for you and your family. That means choosing a plan that covers the services you know you’ll use. Even if it has a higher premium, it will save you money in the long run.
  • Taking good care of yourself and maintaining a healthy lifestyle.
  • Seeing providers within your network.
  • Getting a physical each year to stay on top of any health conditions.
  • Checking with your plan to see if it offers incentives for participating in activities like getting a physical or quitting smoking.
  • Reviewing your “Explanation of Benefits” (EOB) each year to ensure you aren’t being charged for care you didn’t receive. (An EOB is a document or form sent to you by your insurance company explaining what medical treatment or services you received, the amount to be billed, payments made, and what amount – if any – you are responsible for.)
  • Taking advantage of discounts that your plan offers. For instance, some plans offer discounts for gym memberships and vitamins. 
  • Seeing if you can save money on prescriptions with your plan by using a certain pharmacy or a mail order pharmacy service. Be sure to also find out if there are generic versions of your prescriptions available.
  • Trying to plan ahead and get in to see your doctor if you don’t feel good instead of spending more by going to the emergency room for non-emergencies.

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