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Health Insurance Costs
To understand your health insurance costs, you'll first want to look at your premium, deductible, copayments and coinsurance. Knowing how these four pieces work together shows what you could pay annually for your health coverage. It can even help you keep your health insurance costs down and maximize your savings. Let's look at each one individually along with other ways you may be able to get help paying for your health insurance costs.
What Is a Premium?
The premium is the ongoing amount you or your employer pay for your health insurance plan in order to maintain your health coverage. You are responsible for your premium whether you use medical services or not. In most cases, it's paid monthly, but can be paid quarterly or yearly.
What Is a Deductible?
A deductible is the amount you must pay toward your health insurance costs before your health plan begins to pay for your covered services. For example, if you have a $1,500 deductible, your plan won't pay for some services until you've paid $1,500. Your premium and deductible costs are connected. Typically, the higher your deductible, the lower your premium. The lower your deductible, the higher your premium.
How to choose your premium and deductible
If you know you'll be using your insurance often, you may want to choose a plan with a higher premium and lower deductible. This means you'll pay more each month, but you'll meet your deductible faster and your plan will begin to pay for your covered services sooner. Overall, you'll spend less when you go to the doctor over the course of the year.
The opposite of this is true too. You may want to choose a plan with a lower monthly premium and higher deductible if you know you won't use your insurance often. This way your monthly health insurance costs are lower because you take the chance that you may not need to pay your deductible.
What Is Coinsurance?
Coinsurance is usually listed as a percentage, and it refers to the amount that you must pay for a covered service. It does not apply until you meet your deductible.
For example, let's say it costs $100 to see your doctor. If your coinsurance is 25%, you must pay $25 and your health insurance plan pays $75. You must pay the entire amount if you haven't met your deductible.
What Are Copayments?
Copayments are fixed dollar amounts you may have to pay when you see a doctor or specialist. In most cases, it's a small amount, such as $25 for a doctor's office visit. However, you won't always have to pay copayments. The amount you pay depends on your health plan, which type of doctor you see and whether he or she is in network.
What Is an Out-of-pocket Maximum?
The out-of-pocket maximum, or OOPM, is the most you have to pay out of your own pocket for medical services under your insurance plan during the year. Your deductible, coinsurance, copays and any other expenses for in-network essential health benefits (EHBs) apply to the OOPM.
Under the Affordable Care Act, you may be able to get help paying for your health insurance costs through one or both of these options:
- Premium tax credit — A credit toward your monthly premium that lowers the amount you pay.
- Cost sharing assistance — A discount that lowers the amount you pay for your deductible, coinsurance and copayments.
To get help paying for your health insurance costs, you must:
- Have an income within a certain range for your household size.
- Not be claimed as a dependent on someone else's tax return.
- Purchase a Silver plan on the Health Insurance Marketplace.
- Be ineligible for a government-sponsored program or an employer-sponsored health insurance plan
Low or no-cost health insurance through a government program
Based on your income and family size, you may be able to get low or no-cost health insurance through a government program, such as Medicaid or the Children's Health Insurance Program (CHIP).
You can apply online. If you qualify for Medicaid or CHIP, you will be contacted by the proper government office.
Please note: If you sign up for Medicare or CHIP, you will not be able to use the premium tax credit or cost sharing discount. If you have Medicaid coverage now, you're considered covered under the health care law and don't have to buy a plan on the Marketplace.
You may qualify for Medicaid or CHIP now.
For Medicaid, visit Medicaid.gov .
For CHIP, visit insurekidsnow.gov or call 1-877-543-7669.