Premiums, deductions and co-payments: what your health coverage really costs you

In 2021, the average person paid $ 7,739 in health insurance premiums – almost $ 650 a month!

If you are one of 155 million Americans who have employer-sponsored health care, your workplace may have covered some (or all) of those costs for you. On the other hand, if you are an independent contractor or self-employed, you may have had to pay the premiums yourself.

Either way, just paying your insurance premiums (or paying them) doesn’t mean you won’t have any outstanding health care costs to bear. Other major out-of-pocket costs include deductions, co-payments (or co-insurance) and other uncovered services – none of which are usually covered by employers. Let’s take a closer look at how each of these costs works to help you get a better idea of ​​how much you should try to budget for your medical needs.

Deductions: You pay before they pay

Unless you choose an unusual zero-deductible health insurance plan, you will need to cover your deduction before your insurance company can cover even a penny of your healthcare costs.

In other words, you have to pay a certain amount – often four figures – entirely out of your own pocket before your health insurance starts. Last year, the average deduction for employer-sponsored individual coverage was $ 1,945. It was $ 3,722 for families.

So, if you expect to receive significant medical bills soon, keep in mind that you will be on the hook for at least that amount in addition to what you or your employer pay as bonuses.

However, there are ways to cover these costs. For example, if you or your family are enrolled in a high-deductible health plan (HDHP), you can contribute to a health savings account (HSA), a highly tax-deductible account that can help you cover your health care costs. Your employer may also offer a Health Reimbursement Agreement (HRA) or a Flexible Expenses Account (FSA) that you can use for almost the same purpose.

Surcharge and co-insurance: You pay when they pay

Once you make your deduction, your insurance company will start paying for some of your medical expenses. The amount they pay will depend on your co-payment or breakdown of co-insurance.

With a co-payment agreement, you pay a fixed fee quantity every time you use a particular health service. For example, an anthem the plan can make you pay $ 200 for each x-ray, $ 100 each time you visit a specialist, and $ 25 for each prescription you follow. The insurer will then cover the remaining costs.

In case of co-insurance you pay fixed percentage every time you use a health service. For example, if you have a Gypsy a plan that offers 80/20 co-insurance splitting, your insurance provider will cover 80% of the cost, while you will be responsible for the remaining 20%.

In particular, if an emergency room visit costs $ 5,000, Cigna will cover 80% of the bill, or $ 4,000, while you will be on the hook for 20% of the cost, or $ 1,000. Similarly, if the physiotherapy session costs a total of $ 300, your insurer will cover $ 240, while you will be left with a $ 60 bill.

Again, keep in mind that co-payments and co-insurance only start after you have satisfied your deduction. Until then, you bear 100% of your health care costs.

Offline costs: Expect to pay more – or all

However, your typical deductible and co-payment or co-insurance amounts apply only to in the network services. These are services offered by practitioners or providers who accept your health insurance. In other words, they are covered by your health plan.

However, what happens if you need health care, take medication or visit a provider that is not covered by your insurance company?

In these cases, you would use offline services, which almost always come with higher deductions and co-payments (or lower co-insurance rates). For example, if your online deduction is $ 1,000, your offline deduction could be $ 3,000.

Similarly, if your insurance plan offers an 80/20 co-insurance split after covering your deduction for online services, you may encounter a less favorable 60/40 co-insurance split for off-line costs.

However, not all health insurance companies cover the costs offline. Some may refuse to pay for off-line services altogether, which means that you will not actually be insured for all medical expenses or procedures that are not online.

Fortunately, new rules are being introduced to ensure that users are not hit with surprising medical bills when looking for services offline. The No-Surprises Act (NSA), part of the Consolidated Appropriations Act 2021, prohibits health insurance providers from charging higher co-payments (or imposing less favorable co-insurance shares) for off-line services in all situations of emergency aid. and some non-emergency care settings.

Simply put, you can’t be charged more for offline services than for online care – a welcome development that we hope will help you sleep a little better at night.

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