Out-of-pocket healthcare costs are expenses for medical care that the insurance provider doesn't reimburse. This includes premiums, deductibles, coinsurance, copayments for covered services, and any other charges for services that are not covered.
It's important to know some of these terms when choosing a plan and shopping around for healthcare services to avoid any surprises.
Premium –monthly payment made to the insurance company. For most, this comes out of each check pre-tax.- Deductible – the amount you must pay for covered health services before your insurance company starts paying (except free preventive services).
- For example, if you have a $2,000 deductible and have three $1,000 procedures in a year, you will have to pay for the first two procedures, and your insurance provider will cover the third procedure.
- Coinsurance - a percentage of the cost associated with a covered healthcare service that you must pay after you've paid your deductible.
- For example, if your plan has a $1,500 deductible and 20% coinsurance and you use $2,000 in services, you'll pay the $1,500 deductible plus 20% of the remaining $500 up to your out-of-pocket maximum.
- Copayment – a fixed dollar amount that you must pay for covered healthcare services.
- Copays are typically associated with routine health services and preventative care to which your deductible does not apply, for example, when you visit your primary doctor or an urgent care facility and have to pay $40 at the front desk.
But don't stress! Most plans have out-of-pocket maximums, which is a cap on how much you'll pay in a year. This max helps you to control the cost of your healthcare because you know the most you will ever have to pay in a year. For Marketplace plans, there's a limit set every year. For 2023, the out-of-pocket limit can't exceed $9,100 for an individual or $18,200 for a family.
When shopping for a plan, be mindful that the plan with the lowest monthly premium may not always be the best match for you. Generally, health insurance plans with lower monthly premiums have higher out-of-pocket limits, while plans with higher monthly premiums have lower out-of-pocket maximums. So, if you expect a good bit of healthcare expenses, a plan with a higher premium but a lower deductible may save you more money in the long run.
We all want to save money, and even though there are some costs you just can't avoid, there are ways to help your employees save money, like through tax-advantaged benefit accounts. We can help! At Medcom Benefit Solutions, we administer HSAs, HRAs, and FSAs. These accounts provide employees with tax-free benefits while providing the employer with a means to reduce employment expenses.
If you are an employer or broker looking for benefits administration customized for your team, contact us for more info.
Resource: Alegeus.
