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
Certificate of Completion
If you’d like to certify that you’ve completed this module, be sure to contact a UW-Extension Financial Educator to find out about program requirements.