Types of health insurance costs
Premiums. Deductibles. Coinsurance. Out-of-pocket maximum or limit. Health insurance costs go by a lot of names. And that’s just to name a few. Before selecting a plan, it’s important to understand how the different types of costs work and how they may affect your budget. Let’s take a closer look.
What is a premium?
In order to keep your plan active, you’ll likely pay a monthly premium. Your premium payment is your way to access the plan. Some plans have higher premiums and lower deductibles. Some have lower premiums and higher deductibles. If you have an employer-sponsored health plan, your premium is likely deducted from your paycheck. If you bought an individual plan, you’ll pay the insurer.
If you have a UnitedHealthcare Medicare Advantage plan or prescription drug plan with a monthly premium, you have several options for paying your premium.
If you have a Medicaid plan, contact your state’s Medicaid program to learn if any premium may apply.
What is a deductible?
Your deductible is the amount you pay out-of-pocket for your care before your insurance plan starts to pick up the tab. Like car insurance, it’s an amount you agree to contribute before insurance kicks in. Typically, the higher the deductible, the lower the premium. The lower the deductible, the higher the premium.1 A high deductible health plan (HDHP) may be ideal for healthy individuals who don’t foresee having many medical expenses in the coming year.
How do copayments and coinsurance work?
After you’ve met your deductible — depending on the type of plan you have — you may pay a coinsurance for some services. Your coinsurance is a percentage you pay after meeting your deductible. Some of the most common percentage breakdowns are 80/20 and 90/10.
Your copayment, or copay, is different. It’s a fixed amount you pay for a covered service. It’s common to have separate copay rates for different types of care. For example, a visit to your primary care doctor may have a different copay than a visit to a specialist, like a dermatologist. You may also pay a copay for prescriptions. You’ll often pay your copay during the time of service.
What is an out-of-pocket maximum or limit?
Your out-of-pocket maximum or limit is the most you have to pay for covered services within a plan year — including your deductible and/or copays/coinsurance. It doesn’t include your monthly premium payments or anything you spent on services not covered by your plan.