Understanding all the health care acronyms, plans, and associated costs can be overwhelming. As you are considering purchasing your plan for 2020,
Premium
A premium is your monthly payment for subscribing to an insurance company for a health care plan. Costs vary by state and plan, but Health Markets provides estimated monthly premiums by state. If your employer is covering the premium, it is essential to confirm at what percentage so you can calculate the impact on your monthly budget.
Copay
A rate you pay when you see your Primary Care Physician (PCP) or specialist. Copays also apply for pharmacy, urgent care, and emergency room visits.
Typical copays: (will vary based on the plan you choose)
| PCP | Specialist | Pharmacy | Urgent Care | ER Visit |
| $20 | $30-$50 | $10 – generic $20 – brand name | $50 | $100-$250 |
Deductible
The amount you must pay before your health insurance starts to cover your medical bills. A higher deductible typically results in a lower premium, so evaluating your health care needs is key to choosing the plan with the deductible that is right for you.
Scenario: If you choose a plan with a $10,000 deductible, you will pay out of pocket for your medical bills until the $10,000 deductible is met.
If you choose this option due to good health and limited visits to a physician, always keep in mind the unexpected. Should something occur requiring care in an ER and a possible hospital stay, the costs can add up.
For further detail review: Average hospital expenses per inpatient day across 50 states.
| ER Copay | ER Services (minor) | ER Services (major) | Ambulance Services | Hospital Stay (per day) |
| $100-$250 | $500-$1000 | $15,000-$25,000 | $150-$300 | $2500-$5000 |
Coinsurance (coins)
Once you have met your deductible, your coinsurance should apply. The percentages will vary based on the plan you choose but are typically 80/20.
Scenario:
- Total visit: $350.00
- Copay: $30.00
- $350.00-$30.00 = $320.00
- Insurance pays 80% or $256.00 and you pay 20% $64.00
- Your total cost: $20 (copay) + $64 (coins) = $94.00
Out-of-Pocket Maximum (OOP)
The amount you pay OOP. Once you reach this maximum, your insurance will cover 100% of your medical bills. The dollars for your monthly premiums and medical bills you pay that are not covered by your insurance plan are not included in OOP. View maximum out-of-pocket maximum limits for 2020 maximum and limits.
Scenario: You have a $3000.00 deductible. You have an OOP maximum of $4500. Coinsurance $20%. You have surgery that costs $10,000.
- Total visit: $5,000
- You pay; $3000.00 (ded) + Coinsurance: $2000.00 (20% coins) = $5,000
- OOP is $4500. The insurance covers costs above $4500 for your surgery and covered care for the remainder of your plan year,
Choosing the Best Option
When choosing your plan, you will find many options for cost-sharing.
- High deductibles and high out-of-pocket maximums with a low monthly premium.
- Low deductibles and low out-of-pocket limits with a high monthly premium.
Scenario: High Deductible
A high deductible means your monthly premium is lower. Evaluate the level of risk you are willing to take if you choose a plan with a high deductible and high out-of-pocket maximum. Should something happen unexpectedly, and you have a $10,000 deductible, how will this impact your ability to pay your medical bills? Consider the impact of depleting savings, college, or retirement plan dollars saved, if it becomes necessary to draw on these funds.
Scenario: Low Deductible
With a low deductible, your monthly premium is higher. While the lower monthly payment offers some comfort should you need health care services. the higher monthly payment can cause stress making the monthly budget work with other financial commitments. A lower deductible may work best if you or a family member has a chronic condition that needs to be managed or you or a family member needs to see a specialist 3-5 times a year.
Scenario: Out-of-Network vs. In-Network
A Health Maintenance Organization (HMO) plan tends to have a lower monthly premium but requires you to stay in network and your care is coordinated by your Primary Care Physician (PCP). This plan works if you are on a limited budget, preventative care is important to you, and you don’t have a need to seek care outside the HMO network.
A Preferred Provider Organization (PPO) tends to have a higher monthly premium but offers a larger network of providers, options for coverage if you need to seek care out-of-network, and no referral is needed from your PCP. This plan works if you don’t mind paying a higher monthly premium and are perhaps seeing a specialist that falls outside the network for a condition that you would like this
For more information on HMO vs PPO, review: Health Care Enrollment HMO Versus PPO
Navigating the intricate web of health care changes, acronyms, and plan options can be overwhelming. Understanding the basics, especially those that impact your out-of-pocket health costs can help you make the right decision for you and your family’s health care needs.