Anatomy of a Health Plan

Anatomy of a Health Plan

If there’s one thing everyone can agree on about health insurance, it’s that it’s complicated. Think of it as a financial balancing act between what you and your insurance company will pay for your medical care. So let’s break it down into the parts that directly impact your bank account: here’s what you’re paying for.

1. Your Premium

This is the backbone of your health plan: your monthly payments. Pretty much every plan has a premium. Every month, you pay a set amount, and that fee goes towards any care you need now or in the future. It’s like your rent: you have to pay it whether you use it or not.

2. Your Deductible

This is the amount you have to pay out-of-pocket before your insurance kicks in. Usually, this balances out your monthly premium – if you have high premiums, you might have a very low deductible, or no deductible at all. If you have low premiums, you can typically expect a high deductible.

Insider Tip: Before your deductible is met, you’ll have to foot the entire bill for each “episode of care” – for every service you get during each medical visit. Ask your doctor’s office what their self-pay rates are. You can often get a discounted price if they know you’re paying out of pocket. Or, click here to see what doctors in your area are charging on MDsave.

3. Copay + Coinsurance

These are both “cost-sharing,” aka “let’s split the bill.” Your copay is a set fee that you’ll pay at every visit. Fortunately, you’ll have some heads up on what that number will be. Your copay for various providers (e.g., Primary Care Provider (PCP), Pharmacy, ER) is usually listed right on your insurance card.

Coinsurance is the same idea, except instead of a set fee, you’ll chip in a set percentage. For example, your coinsurance for an inpatient hospital stay might be 80/20 – your insurance will pay 80 percent of the bill, and you’ll owe the remaining 20 percent.

Insider Tip: Get to know your provider network! Your copay or coinsurance may be much higher if you go to a doctor who isn’t in network for your insurance. Rates valid at participating locations only!

The Bottom Line:

If you have high out-of-pocket costs (a high deductible,  high copay/coinsurance, or no insurance at all), it pays to do your research and shop around before you make a routine or planned healthcare purchase. (It literally pays! It puts money back in your pocket.) You can talk to your doctor’s office and ask about self-pay rates, or you can check MDsave to see going rates with doctors in your area. Don’t wait for the bills to arrive in the mail to find out what you’re going to owe – know before you go.

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