Health Insurance Costs
- Terms and Definitions of Costs
- Networks
- Preventative Care
- Prescription Drug Coverage
- Additional Resources
Premium
This is a monthly cost you pay to have insurance (similar to a membership fee). This is paid by you and/or your employer. If you do not pay this, you will lose your health insurance.This typically covers:
- Preventative services
- Screenings for diabetes, high cholesterol, high blood pressure, breast, colon and prostate cancer
- Wellness exams
- For adults and well child visits for children
- Immunizations
Example: Your monthly premium is $325.00 a month that you pay OR if you have health insurance through your work, your employer pays part and your portion of this cost is deducted from your paycheck.
Calendar Year
It is important to know that each year, your deductible and out-of-pocket-maximum start over again.Example: Your insurance calendar year is from January 1st through December 31st. This year you have hit your deductible and out-of-pocket-maximum due to your broken leg and surgery. On January 1st of next year, your deductible will start over again until you have paid for additional health services, beyond preventative care.
Costs Beyond Prevention Services
If you need additional healthcare services outside of preventative services, you are typically required to pay for a part of this cost. These costs are in addition to your monthly premium.Deductible
A deductible is the money you pay, in addition to your monthly premium before your insurance will pay for services.Example: Your deductible is $2000. You break your leg and you have additional costs such as a doctor’s office visit, an x-ray, crutches and physical therapy visits. You would be required to pay for these services, without assistance from your health insurance, until you have met your deductible, or paid the $2000.
Coinsurance
Once you have paid your deductible, you will pay a portion of the additional healthcare costs that you have, which is a percentage of the additional costs set by the health insurance plan.
Example: Your medical bills from your broken leg total $3500. You have already paid your $2000 deductible but you have $1500 additional dollars that you owe. Your insurance plan has a coinsurance of 20%. Therefore, you will end up paying 20% of the $1500 that is still owed, which is $300.
Out-of-Pocket Maximum
This is the most you would have to pay, in addition to your premiums for your health insurance in a calendar year. Once you have paid this amount, your insurance will pay for all additional costs.
Example: Your broken leg is not healing properly, and you are required to have surgery. Your out-of-pocket-maximum is $8000. Once you have paid this amount towards your medical bills, the health insurance will cover 100% of the additional costs you owe, for the remainder of that calendar year.
Copay
This is a fixed amount that you pay when you get a health service that is not preventative. Not all health insurance plans offer copays. These typically cover certain services such as: office visits, lab tests, prescription medications or visits to the emergency room.Example: You have diabetes and you have to see your Primary Care Provider every 3 months for management. Your health insurance has a copay for office visits of $25, so each time you go in for this service you are charged $25. This $25 typically goes towards your deductible, but this varies per plan.
Networks
Network: This is the health-care providers’ your insurance company has made a contract with to deliver services at a negotiated fee.In-Network
The healthcare provider has a contract with your health insurer. This means they offer lower deductibles, coinsurance or copays to you if you see a provider that is in this network.Out-of-Network
This healthcare provider does not have a contract with your health insurer and you will pay more to see this provider. Some insurance plans do not cover any costs when you see an out-of-network provider.
Preferred Network
If you see a provider within a preferred network you will have lower service costs.
Non-preferred Network
You can see a provider in this network but will pay higher service costs.
Preventative Care
All insurance plans cover preventative care, but they may vary in the specifics of what they cover. It is important to understand what is and is not covered under your plan's Preventative Care Services.Example: You are being seen by your primary care provider for a wellness exam. The provider discovers that your screening blood sugar, which was checked by finger poke in the office, was high and they explain that additional lab work is needed to determine if you have diabetes. Your office visit and blood sugar screening test might be covered under your preventative services, in which you would not be billed additionally for these services, but the added blood work which was ordered is not covered and you would be billed for this and these costs would go towards your deductible.
Prescription Drug Coverage
All health insurance plans will include a prescription drug benefits plan but these vary widely depending on what type of plan you choose.Each health insurance plan will have a list of covered medications which are called a formulary. This formulary will list the brand name and generic name of medications that the plan includes.
Within the formulary are tiers. The copayment and/or coinsurance for each tier will be different. Typically, you will pay more the higher the tier number.
Example:
- Tier 1: Generic medication (cost you the least)
- Tier 2: Preferred, brand-name medications
- Tier 3: Non-preferred, brand-name medications
- Tier 4: Specialty medications (cost you the most)
Some medications may not be covered at all by your insurance and will be full cost to you until you have paid your deductible.
You will continue to pay either a copay, coinsurance or full cost for medications in the same manner as other health services; first meeting your deductible, then following a coinsurance payment plan and then once you have hit your out-of-pocket-maximum, these medication costs will be covered by your insurance.
Some health insurance plans have a separate deductible for prescription drugs, therefore make sure to read your plan carefully.
Addtional Resources
There are many terms used in health insurance plan documents. You can use these additional links to further understand health insurance terms:
- Terms and Definitions of Costs
- Networks
- Preventative Care
- Prescription Drug Coverage
- Additional Resources
Premium
This is a monthly cost you pay to have insurance (similar to a membership fee). This is paid by you and/or your employer. If you do not pay this, you will lose your health insurance.This typically covers:
- Preventative services
- Screenings for diabetes, high cholesterol, high blood pressure, breast, colon and prostate cancer
- Wellness exams
- For adults and well child visits for children
- Immunizations
Example: Your monthly premium is $325.00 a month that you pay OR if you have health insurance through your work, your employer pays part and your portion of this cost is deducted from your paycheck.
Calendar Year
It is important to know that each year, your deductible and out-of-pocket-maximum start over again.Example: Your insurance calendar year is from January 1st through December 31st. This year you have hit your deductible and out-of-pocket-maximum due to your broken leg and surgery. On January 1st of next year, your deductible will start over again until you have paid for additional health services, beyond preventative care.
Costs Beyond Prevention Services
If you need additional healthcare services outside of preventative services, you are typically required to pay for a part of this cost. These costs are in addition to your monthly premium.Deductible
A deductible is the money you pay, in addition to your monthly premium before your insurance will pay for services.Example: Your deductible is $2000. You break your leg and you have additional costs such as a doctor’s office visit, an x-ray, crutches and physical therapy visits. You would be required to pay for these services, without assistance from your health insurance, until you have met your deductible, or paid the $2000.
Coinsurance
Once you have paid your deductible, you will pay a portion of the additional healthcare costs that you have, which is a percentage of the additional costs set by the health insurance plan.
Example: Your medical bills from your broken leg total $3500. You have already paid your $2000 deductible but you have $1500 additional dollars that you owe. Your insurance plan has a coinsurance of 20%. Therefore, you will end up paying 20% of the $1500 that is still owed, which is $300.
Out-of-Pocket Maximum
This is the most you would have to pay, in addition to your premiums for your health insurance in a calendar year. Once you have paid this amount, your insurance will pay for all additional costs.
Example: Your broken leg is not healing properly, and you are required to have surgery. Your out-of-pocket-maximum is $8000. Once you have paid this amount towards your medical bills, the health insurance will cover 100% of the additional costs you owe, for the remainder of that calendar year.
Copay
This is a fixed amount that you pay when you get a health service that is not preventative. Not all health insurance plans offer copays. These typically cover certain services such as: office visits, lab tests, prescription medications or visits to the emergency room.Example: You have diabetes and you have to see your Primary Care Provider every 3 months for management. Your health insurance has a copay for office visits of $25, so each time you go in for this service you are charged $25. This $25 typically goes towards your deductible, but this varies per plan.
Networks
Network: This is the health-care providers’ your insurance company has made a contract with to deliver services at a negotiated fee.In-Network
The healthcare provider has a contract with your health insurer. This means they offer lower deductibles, coinsurance or copays to you if you see a provider that is in this network.Out-of-Network
This healthcare provider does not have a contract with your health insurer and you will pay more to see this provider. Some insurance plans do not cover any costs when you see an out-of-network provider.
Preferred Network
If you see a provider within a preferred network you will have lower service costs
Non-preferred Network
You can see a provider in this network but will pay higher service costs
Preventative Care
All insurance plans cover preventative care, but they may vary in the specifics of what they cover. It is important to understand what is and is not covered under your plan's Preventative Care Services.Example: You are being seen by your primary care provider for a wellness exam. The provider discovers that your screening blood sugar, which was checked by finger poke in the office, was high and they explain that additional lab work is needed to determine if you have diabetes. Your office visit and blood sugar screening test might be covered under your preventative services, in which you would not be billed additionally for these services, but the added blood work which was ordered is not covered and you would be billed for this and these costs would go towards your deductible.
Prescription Drug Coverage
All health insurance plans will include a prescription drug benefits plan but these vary widely depending on what type of plan you choose.Each health insurance plan will have a list of covered medications which are called a formulary. This formulary will list the brand name and generic name of medications that the plan includes.
Within the formulary are tiers. The copayment and/or coinsurance for each tier will be different. Typically, you will pay more the higher the tier number.
Example:
- Tier 1: Generic medication (cost you the least)
- Tier 2: Preferred, brand-name medications
- Tier 3: Non-preferred, brand-name medications
- Tier 4: Specialty medications (cost you the most)
Some medications may not be covered at all by your insurance and will be full cost to you until you have paid your deductible.
You will continue to pay either a copay, coinsurance or full cost for medications in the same manner as other health services; first meeting your deductible, then following a coinsurance payment plan and then once you have hit your out-of-pocket-maximum, these medication costs will be covered by your insurance.
Some health insurance plans have a separate deductible for prescription drugs, therefore make sure to read your plan carefully.
Addtional Resources
There are many terms used in health insurance plan documents. You can use these additional links to further understand health insurance terms: