Managing your health care costs

When you have health insurance, there is still some portion of the cost of your medical care you will have to pay. This information will help you better understand your health coverage and anticipate the costs you will pay under your plan. 

Out-of-pocket costs

Out-of-pocket cost is the portion of your medical bill not covered under your health insurance plan. You pay your out-of-pocket costs to your provider, either at the time of service or after health plan determines what those costs are. Typical out-of-pocket costs include deductibles, co-payments, co-insurance or extra costs for getting treatment outside of your health plan’s network. 

Deductibles

A deductible is usually a flat dollar amount (like $300) that is subtracted from the amount your health insurance plan will pay for your medical bills. For example, if you receive a $500 medical bill and you have a $200 deductible, your health plan will pay $300 of the bill. Your deductible may not apply to certain preventive treatment (mammograms, annual examinations, child vaccinations). In this case, your health plan pays the full bill. If you have family health coverage, your plan may have a family deductible and an individual deductible. Your health plan can explain these to you.

Co-payments

Often called "co-pay," this is a fixed dollar amount you pay each time you receive a medical service.  For instance, if you go to see your family doctor for a cold, your health insurance plan may require you to pay a $30 co-pay to your doctor upfront, for the office visit. Co-pays are usually smaller for primary care doctors than they are for urgent care visits or for specialists. Again, consult your health plan for an explanation of your co-pays.

Co-insurance

Co-insurance is the percentage of the medical bill you pay after you’ve met your deductible. Many plans are 80/20. That means after your deductible is met, you pay 20 percent of the remaining bill and your health plan pays 80 percent. Your co-insurance percentage usually varies based on whether you’re treated in-network or out, and on the type of treatment you receive. The percentages can also vary based on the type of treatment you receive. If you’re unsure, get an explanation from your health plan.

Is there a limit on the amount I pay out of pocket each year?

Some plans have an annual out-of-pocket limit, sometimes called a maximum out of pocket. This limits the amount your health plan can require you to pay out of pocket in a year. Once you have paid that amount of money out of pocket, your health insurance provider will pay your full medical bills for the rest of the year, assuming they’re covered by your plan. Check with your health insurance company to find out your annual out of pocket limit and when your plan year begins and ends. 

What is a network and how does it affect what I have to pay for my medical care?

Most health insurance companies have contracts with doctors and hospitals, who agree to charge discounted rates to customers of that insurance company. The providers under contract with that insurer are a considered a network.

Health insurance plans will then encourage customers to use health care providers in the network. This encouragement usually takes the form of lower co-pays, deductibles and other out-of-pocket costs. If you decide to get medical care from a doctor or facility outside the network, you will likely pay more – or even all – of the bill. When the doctor has not negotiated a discounted rate, the doctor may also charge you an additional amount above what your plan pays, known as "balance billing." Your health plan should offer a full listing of providers in your network and the difference in costs inside and outside the network.

How does my health insurance plan decide what I have to pay?

After you receive medical care, your doctor or health care facility will usually submit a bill to the health insurance plan. In some cases, you have to pay the doctor and submit a claim for reimbursement. 

Your doctor sends the health insurance plan a "claim" that lists the costs for the care you received. When reviewing the claim, the health insurance plan will determine how much of the cost you must pay based on the following:

• Is the care you received covered by your health insurance plan? If you, for instance, have plastic surgery not covered by your plan, then the insurance company will pay nothing. 
• Is the doctor in the plan’s network? This determines what co-pays, co-insurance or deductibles may be applied.
• Have you met your deductible or annual out of pocket maximum? 

Your health insurance plan will provide you a document called an Explanation of Benefits. The EOB shows what your health insurance plan paid and what you need to pay. You may receive the EOB in the mail or access it through a secure website.

If I disagree with how a claim was processed or paid, what can I do?

If you believe your health insurance plan denied a claim or failed to pay the correct amount, you can appeal the decision through your insurance plan or you can contact the Department of Insurance at 800-726-7390.