The Affordable Care Act (ACA) has increased the American consumers' access to private health insurance plans but many Americans are still concerned about the high costs of healthcare. In 2014, of all Americans enrolled in a marketplace insurance plan, only twenty-four percent thought they had access to affordable care if they needed it1 because many plans have high out-of-pocket costs associated with them. To choose the right plan, consumers must understand the basic principles of out-of-pocket expenses and how they affect their health insurance usage.
An out-of-pocket expense is the portion of healthcare cost the enrollee is obligated to pay before the insurance coverage goes into effect. Both ACA plans and terms health plans have out-of-pocket expenses associated with them. Out-of-pocket expenses include co-payments, co-insurance, and deductibles.
A deductible is the amount a person has to pay each year before the insurance will begin covering expenses. For instance, plans that have a $3,500 deductible require the enrollee to pay the $3,500 before the insurance will begin paying. In some cases an insurance plan may provide coverage for certain medical expenses such as urgent care or a wellness check-up before the deductible is met.
Co-insurance refers to a percentage of the charges for medical services once the deductible is met. For example, the plan may have a co-insurance rate of 30% for in-network services; if the total charge for the medical services is $100, the enrollee is responsible for $30 and the insurance will pay the remaining $70. Out-of-network healthcare may have a higher co-insurance rate than in-network because they don't have a contracted rate with the insurance provider.
An insurance co-payment is a flat fee charged for healthcare services. For instance, this can be $25 co-pay for an in-network office visit, co-pays maybe more for the services of a specialist or an out-of-net-work provider. In some instances out-of-pocket deductibles must be met before co-payments take effect.
If possible out-of-pocket expenses should be limited to the maximum amount paid for deductibles, co-payments and co-insurance within a coverage period. By limiting the amount of out-of-pocket expenses, the insurance plan will pay 100% of covered in-network expenses for the rest of the year. Costs that will not be counted toward your out-of-pocket expenses include monthly premiums, costs for out-of-network services, and medical services that aren't covered under the plan.