Healthcare expenses don’t stop after you pay your monthly plan premium—there may be copays, coinsurance and deductibles to consider.
Where to Find the Best Information
After you enroll in a health plan, you will get a summary of your benefits. Be sure to read these details so you know what is covered in your plan and what your portion of the costs for services will be.
Healthcare costs are generally shared costs – you pay some of the expense, but so does your insurance company and your employer (if you have insurance through your employer) or the government. You portion could include:
- Premiums are the payments you or your employer make, generally each month, to participate in a plan. Think of premiums as a subscription, like to a magazine. If you don’t pay your premiums, your insurance “subscription” is cancelled.
- Deductibles are what you pay for healthcare services before your insurance plan starts to pay for services. For example, if your deductible is $2,500 a year, you need to pay that amount – for lab tests and procedures and other care – before insurance starts paying. Generally, premiums and copays do not count toward your deductible.
- Copays (also called copayments) are a fixed amount you pay for a specific visit or service. Your copay is usually a very small amount compared to the total cost of that office visit.
- Coinsurance: Coinsurance is the percentage that you pay for a covered service, after the deductible has been met. Let’s say a CT scan is covered with a 20% coinsurance, and the scan costs $1,000, you will pay only $200 for the scan as long as your deductible has been met. (If your deductible has not been met, you will pay your remaining deductible amount, then 20% of any costs exceeding your deductible.)
- Limits: Some insurance plans limit the amount of coverage you can get in a year for a specific treatment or service. For instance, your specific plan may cover up to eight mental health visits or up to $400 of speech therapy per year.
- Out-of-Pocket Limit: This is the most you will pay for healthcare services during a policy period (usually one year) before your health plan pays 100% for covered benefits. The limit does not apply to the amount spent on premiums.
Plan Ahead: Paying for Healthcare Costs
If you know you are going to have some big healthcare costs coming up–you might consider setting up one of the following tax-deductible accounts to help pay for qualified health expenses:
- Health Savings Accounts (HSA) can be offered with qualified, high deductible health plans (HDHP). An HSA is an individually-owned, FDIC-insured savings account that allows you to make pre-tax contributions and earn tax-free interest.
- Flexible Spending Accounts (FSA) are often used with plans set up by your employer. An FSA allows an employee to set aside earnings to pay for certain health-related expenses. Similar to an HSA account, money deducted (taken) from an employee’s salary is not subject to payroll taxes.
Other Tips to Reduce Your Costs
- Understand the Plan: In the long run, it pays to take the time to select coverage that fits the needs of you and your family.
- Stay in Network: All plans have a network of providers that have agreed to be paid discounted amounts to help keep the costs down for you and the insurance company. Choosing in-network providers will cost you less.
- Stay Healthy: Preventive care is less expensive for everyone.
- Go Generic: Unless your doctor states otherwise, ask your doctor to write your prescription for a generic drug (if there is one available). Generic drugs are regulated by the FDA and have the same active drug ingredients, safety, performance, quality and strengths as brand-name drugs. And they are almost always less expensive.