Understanding Costs

When buying health insurance, it's important that you know how your plan works so that you are aware of potential costs. Learn about how insurance works and explore typical cost scenarios.

When you're shopping for insurance, the total cost of keeping you and your family healthy is a top concern. You want your plan to cover your total health care costs as much as possible, you want affordable premiums, and you want any out-of-pocket health care costs to be minimal. To help you shop for a plan that meets all of these factors, it's important to understand the costs that go into buying and using health insurance.

• Shopping for individual coverage? Use our Premium Meter to see how different factors may impact your monthly premium.
• Selecting coverage through your employer or another group? Use the Health Plan Cost Estimator to evaluate insurance plan options and estimated annual costs.

Your Total Health Insurance Cost and the Network

When you choose a plan, one thing to consider is the size of their network. It's your lifeline to quality and convenient care. A specific network of doctors, hospitals and other health care professionals, sometimes called providers, helps keep your premiums low for a number of reasons:

• Network doctors and hospitals have agreements with the insurance company that save you money
• Services are provided at a lower rate to members
• Streamlined expenses, such as billing, keep costs down
• Providers are held to certain quality standards for plan members

When you choose care outside a specified network, benefits and costs can change. Every plan is different, however, some plans provide limited coverage and others offer no coverage at all for out-of-network services. Since doctors, hospitals and other health care professionals outside the network
don't have an agreement with your insurance company, the price of services may be higher.

When you're shopping for insurance, look closely at the plan network. Check to see if you will be able to get as many services within the network as possible, or that you'll have options, if you decide to go outside the network.

Other Expenses That Affect Your Total Health Insurance Cost

Your total health insurance cost can also be affected by your out-of-pocket expenses. There's the copayment, which is usually a small fixed amount you pay per visit to in-network doctors. That's not to be confused with coinsurance. That's the percentage of costs you may be responsible for within your plan, once you satisfy your deductible.

For example, let's say you've met your annual deductible, so your plan now pays for benefits. You may wonder what you will have to pay if you visit your doctor. The answer depends on the percentage your plan pays for medical services that are covered under the plan.

For example, you bruise your hip in a fall and you need an X-ray. Your plan covers 80 percent of an X-ray. Here's how the costs might break down:

• The X-ray costs $200
• Your plan covers 80 percent, which is $160
• Your out-of-pocket cost, or coinsurance, is $40 for the X-ray

That's a simple example. You should also be aware of the maximum limit for a procedure or medical service specified in your plan. These limits help keep rates to a fair and reasonable standard, which helps lower costs for all members.

To illustrate this, let's say that, for some reason, your doctor charges more for an X-ray:

• The maximum covered cost for an X-ray in your plan is $200
• Your doctor charges $300
• You may be responsible for the $100 difference

So, when calculating your out-of-pocket costs, two things to remember are the percentage that is covered by your plan and the limit for any specific service you'll be using. You also need to consider your out-of-pocket expense limits. The out-of-pocket expense limit represents the maximum amount you are responsible for each year. Once the out-of-pocket expense limit is reached, insurance covers 100 percent of eligible expenses. If your plan has copayments, you are still responsible for copayments even after your annual out of pocket limit is reached.

When you understand some of the costs of buying and using health insurance, it's easier to find the plan that's best for you and your family. Best of all, you'll be able to get the most out of the plan you choose.