Health insurance costs have risen dramatically in response to the rising cost of health care. The government has helped by making health insurance accessible to everyone through state marketplaces, but there are still costs involved.
Once you have insurance, it is important to read over your policy so you know what is covered and how much you will have to pay out of pocket for medical services, as every policy is different. After you pay your deductible, you usually pay only a copayment or coinsurance for covered services. Coinsurance is a percentage you pay for a service—typically about 20% of the total cost—then your insurance company pays the rest. A copay is a flat fee you pay for a service such as $25 for a doctor visit or prescription. The out-of-pocket maximum is the most you will pay for covered services in a plan year. After you spend this amount, your health plan pays 100% of covered services.
Jordan got injured while playing basketball. He has health insurance with a $5,000 out-of-pocket maximum. He has already met $2,000, meaning this is how much he has already paid toward his maximum for the year. His medical services cost $4,000. How much does Jordan have to pay?
$5,000 out of pocket maximum − $2,000 already paid in the year = $3,000 remaining of his $5,000 out-of-pocket maximum
$4,000 medical services − $3,000 out of pocket = $1,000 still owed
Jordan has $3,000 to cover his out-of-pocket maximum and the insurance company owes the $1,000 balance.
Let's Practice
The individuals described below need help understanding their health insurance. Now that you know a little more about health insurance, read their scenarios and see if you can figure out their insurance costs.
Alex was recently injured and admitted to the hospital. He has insurance with a $1,000 deductible and is required to pay 20% coinsurance after the deductible. His hospital visit cost $12,000. How much does Alex have to pay out of pocket?
$12,000 − $1,000 deductible = $11,000 still owed
$11,000 \( \times \) .20 coinsurance = $2,200
$2,200 + $1,000 = $3,200 Alex pays
Nina was injured playing softball and required a visit to the Emergency Room. She has insurance with a $200 copay for the emergency room. How much did Nina have to pay out of pocket?
$200
