Health Insurance Costs
- Your Premium
- Cost Sharing
- Cost Sharing and Your Premium: A Balancing Act
- Yearly and Lifetime Limits (Maximums)
- Keep Track of Your Bills
- How Much Will I Have to Pay?
- The Allowed Amount
Your premium is a fee to get and keep insurance. You may pay the whole premium. Or your employer may pay all or part of the premium. If you buy individual/family coverage through Covered California and you qualify for a premium subsidy, the federal government will pay part of your premium. Usually people pay premiums every month.
The cost of monthly premiums will vary for different people. It all depends on your age, where you live, your cost-sharing, and how many family members are covered under your policy. It will also depend on how much your share of the costs are. Generally, the higher your cost sharing (see below), the lower your monthly premium will be. For more information about how
Cost sharing is the part of your health care expenses that you will pay for. Cost sharing comes in the form of co-insurance, co-pays, and deductibles. When you buy individual/family coverage, you can choose your level of cost sharing. If your employer offers coverage, it may choose the level of cost sharing for you. Some policies have a co-pay and some have a co-insurance. Some have both.
Co-insurance is the part of each bill that you must pay after you have met your deductible. For example, if your insurance covers 80% of the charges for your surgery, you must pay the other 20%. Many PPOs have co-insurance and many HMOs have co-pays.
A co-pay is a flat amount you pay for each visit to a doctor or for each prescription. Your co-pay to visit a doctor, for example, may be $20. Your co-pay to fill a prescription might be $15.
Your deductible is the amount you must pay each year before your insurance begins to pay. If you have a grandfathered plan, you may have separate deductibles for prescription drugs and hospital care. Some policies have no deductible. Read your policy to learn how your deductible works. For some services, like preventive care, the deductible does not apply.
Your annual out-of-pocket limit caps the amount of out-of-pocket expenses you have in a year. After you reach this limit, you may not have to pay any more co-pays or co-insurance for the year. Grandfathered policies may have more complicated rules about out-of-pocket limits, so read your policy to learn how your out-of-pocket limit works.
The higher your cost sharing (via co-pays, co-insurance, and/or deductibles), the lower your monthly premium will be. The monthly premium for a plan where you pay a larger percentage of the costs will be lower than a plan where you pay less out-of-pocket. For example, a plan where you have a 30% co-insurance will have a lower premium than a plan in which you pay only 20% co-insurance. Your cost-sharing has an annual maximum (annual out-of-pocket limit), and the higher that maximum is, the lower your monthly premium.
You will want to think about the costs of premiums and annual out-of-pocket costs. They are related. For example, young, healthy people often like plans with higher cost-sharing but lower monthly premiums. This is because they do not expect to got to the doctor very much. Older people or people with health problems who choose this same lower monthly premium plan would end up paying a lot more. That is because these groups need more care and visit the doctor a lot. This is why some older people or people with health problems choose insurance with higher premiums. They know their out-of-pocket costs when they visit the doctor or hospital will be less.
The Affordable Care Act (ACA) prohibits insurance policies from putting an annual or lifetime limit on essential health benefits. If your policy is grandfathered under the ACA, there may still be limits, so check your policy carefully.
The Affordable Care Act requires that preventive services be provided to you without any out-of-pocket cost (cost sharing) to you. See more about preventive care here.
Keep Track of Your Bills
- Keeping track of your bills helps you protect yourself from fraud.
- You may get something in the mail that says, "This is not a bill." It may be called an Explanation of Benefits (EOB). You should not pay it.
- If you do not understand a bill, call the people who sent it to you. You have a right to get an explanation.
- If you think the bill is wrong, call your health insurance company. You can file a complaint or appeal if you disagree with the bill. Use this form to do so.
- If you have two insurance policies, usually one policy pays first. Talk to your insurance companies to make sure you understand what to do with your bills.
If you have a procedure, it can be hard to know how much your share of cost will be. Call your insurance company and ask for an estimate before you get a costly service. Ask if you can compare the costs of different providers online.
Some policies have a limit on what they will pay for a service. This is called the "allowed amount" or "negotiated rate." If your provider charges more, you may get a bill for the extra amount. This is called balance billing.
- A provider that is not in your PPO network (out of network) may bill you for charges over the allowed amount.
- However, a provider that is in your PPO's network (in-network) should not bill you for charges over the allowed amount. You can only be billed for your deductible, co-pay, or co-insurance.