Understanding Your Health Insurance Costs | Consumer Reports

You're deciding whichinsurance plan to purchase, and want to know, howmuch is it going to cost. Well, it's not so simple. Sometimes, you pay moneytoward your health care. Sometimes, the insurancecompany pays money. But when? To figure it all out,there are three main ideas you need to know.

Premiums, deductibles,and out-of-pocket maximum. It may sound complicated,but stay with us. It's not as hard tounderstand as you think. First, premiums. Think of your insuranceas a monthly membership. Every month, you pay the sameamount in order to be a member. That amount is your premium. With your premium,say, $200 a month, you get some preventivecare for free.

This includes care likevaccines and screening for diabetes, cholesterol,and breast cancer. This care is coveredby your premium. But what if you need morethan just preventive care? If you need a health servicebeyond preventive care– illnesses, a broken leg,emergency room visits– you usually need to pay extra. How much? Well, that changes over time.

There are three main stages. First, you pay. Then, your insurance payssome, and you pay some. And finally, yourinsurance pays everything. So how does this work? In the first stage, atthe beginning of the year, you pay for mostof your health care until you reach your deductible. Remember that word?.

Deductible. A deductible isthe amount of money you have to pay for yourcare before the insurance company will share the costs. So let's say yourdeductible is $500. That means, almost everytime you get health services, you will pay forall those services, until you've paida total of $500. It's like you'refilling up a bucket.

Once you add enoughto that bucket so that you pay yourwhole deductible, then everything changes. Then, you enter intothe second stage. Now, every time youget health services, your insurancecompany will share the cost of those services. How much? That depends on your plan.

Usually, you paypart of the cost– fees called co-pays,or coinsurance– and your insurancepays the rest. But the second stagedoesn't go on forever. If you reach acertain amount, you won't have to payfor any services. Remember that bucket? Every time you fill it withco-pays and coinsurance, your insurance companyis keeping track.

If you fill thatbucket up to the top, everything changes again. You enter stage three. From this point on,your insurance company pays everything forthe rest of the year. That's right. Every dollar ofyour health services paid by your insurance company. So what's at thetop of that bucket?.

It's called yourout-of-pocket maximum. This is the most money youwill pay for your health care over an entire year. So let's say your out-of-pocketmaximum is $2,000. After you pay your$500 deductible, and if you pay an additional$1,500 for various health services, you've hit yourout-of-pocket maximum. From then on, you don't pay apenny more for covered health care services.

It's important to know thatevery year, this starts over. So next year, yougo back to stage one and need to meet yourdeductible yet again. So let's review. You pay a monthly premiumto get into the club, and get many preventiveservices free. You pay for other servicesuntil you meet your deductible. Then, you and yourinsurance company share the costs ofhealth services.

You pay co-pays orcoinsurance, and your insurance pays the rest, until you hityour out-of-pocket maximum. After that, your insurancecompany pays everything. So how much doesyour insurance cost? You will at least pay foryour monthly premiums. And, at most, you will payfor your monthly premiums plus your out-of-pocket maximum. It all depends onthe plan you choose and the care that youand your family need.

You can get free help froma healthcare.gov assistor to choose the plan that'sright for your family.

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