Health plan costs: Premiums, copayments, and deductibles
Choosing the best healthcare plan to suit both your medical needs and your budget can sometimes feel overwhelming. Monthly premiums are a given, but copayments and deductibles will also affect your annual overall cost. The first step in picking the right plan is to understand the ways different plans work in terms of coverage and out-of-pocket expenses.
Things to consider:
Type of plan – HMO or PPO
- Premium – The amount you pay each month for health coverage
- Copayment, or copay – A set dollar amount you pay for covered services after you meet any applicable deductible
- Deductible – The amount you pay each calendar year for most covered services before your insurance begins to pay
- Coinsurance – The percentage amount that you pay for benefits after you meet any applicable calendar-year deductible
HMO versus PPO plans
How an HMO works
- Preventive care is always covered 100%; all other doctor visits will require a copay.
- Coverage is limited to local doctors or hospitals within your plan, except in the case of an emergency; or, if a specialist for the care you need is not in your plan's network, then your primary care physician will refer you to one outside the network.
- Monthly premiums are generally lower than other types of plans, with a low or no deductible; however, you need a referral to see a specialist.
How a PPO works
- Like an HMO, preventive care is always covered 100%; however, you need to meet your deductible before your insurance starts to pay.
- A PPO plan offers a much larger network of doctors and hospitals, with the option to go out of network, but your costs will be higher. And, in some instances, services provided by a non-network provider are not covered. If a service isn’t covered, you may be responsible for all billed charges.
- Monthly premiums are higher to allow you to see specialists anytime you wish, without a referral.
Consider your medical needs
What’s better for you?
- Higher premiums/lower deductible
- Lower premiums/higher deductible
If you think you will not need to see many doctors in a given year, you may want to choose a plan with a lower monthly premium and a higher deductible.
If you have medical issues that will require you to go to doctors more often, a higher premium with a lower deductible may turn out to be more cost effective for you.
Understand copayments and coinsurance
In general, plans with low monthly premiums have higher coinsurance percentages, and plans with higher premiums have lower coinsurance percentages.
Watch this video to better understand how different healthcare plans can affect your healthcare costs:
Your healthcare costs will vary depending on your plan and your individual healthcare needs. We can provide you with tools and support to help you choose a plan, but only you can decide which plan will be the most cost effective for you.