Learn about health insurance costs:
1. You will make a payment every month to keep your health
This is called a premium. If you don’t pay the monthly premium, you will lose your
health insurance plan.
2. There are 3 stages to using your health insurance during the year:
Your deductible is the money you will need to pay for care before the insurance company starts to pay
Your out-of-pocket-max (maximum) is the most you will pay in 1 year for covered health services
in addition to the premium.
3. How the deductible and out-of-pocket max works:
Gabriel’s plan has a $1,500 deductible, and a $2,500 out-of-pocket max
For most plans, until you reach your deductible, you pay for all of your medical care.
When you go to the doctor, you may be asked for a co-pay. After your visit, you may
receive a bill in the mail for the rest of the charges. Many plans do not count the co-pay
and co-insurance you pay toward the deductible.
Once you have paid enough bills to equal the amount of your deductible then, you
will only pay for the co-pay or co-insurance for all your covered medical services.
Once you have paid enough co-pays, co-insurance, or bills equal to the amount of
the out-of-pocket max, you will not need to pay anything more for the rest of the year.
4. Your possible yearly cost:
Your possible yearly cost is:
12 months of monthly premium payments + the out-of-pocket-max
Gabriel has a $405 per month premium payment. In 12 months, he will pay $4,860 in
premiums ($405 x 12 = $4,860)
His out-of-pocket max is $2,500. If he uses health care a lot, the most he will likely
pay is $7,360.
Gabriel can save $208 a month to cover his out-of-pocket costs. If he has a medical
emergency he will not have to come up with $2,500 at one time.
Ready to review what you learned above? Take this How Health Insurance Works Quiz