The 5 Costs That Make Up Your Health Plan

Ever want to know how much a health care service is going to cost you before you schedule the appointment? If you’re like most of us, your money is important to you, and you want to know what you pay when it comes to health care.

The easiest way to understand what costs you’re responsible for is to understand what the financial terms actually mean.

Premium: A premium is the monthly amount you or your employer pays to your health care company to keep your coverage. Think of it like a gym membership – it’s what you pay to be a Blue Cross member. Premiums vary based on what expenses are covered in a plan and which doctors are seen.

Copayment (or Copay): Your copay is a fixed amount you pay for a covered health care service, usually when you get the service. Copays vary depending on where you received care. A throat culture at an urgent care center will have a higher copay than a throat culture at your primary doctor.

Deductible: A deductible is the amount you owe for covered health care services before your health care plan begins to pay. You will generally pay the full price of health care costs until your deductible is reached. Preventive services (like your annual wellness visit) are covered by your insurer and don’t count toward the deductible.

Coinsurance: Coinsurance is your share of the costs of a covered health care service, usually a percentage (for example, 20 percent) of the allowed amount for the service. A 20/80 coinsurance means the consumer pays 20 percent of the costs and the insurance company picks up the remaining 80 percent.

Out-of-Pocket Maximum: Your out-of-pocket maximum is the most you’ll pay in deductible, copayment and coinsurance during the year. Once the out-of-pocket maximum is hit, your health insurer will typically cover 100 percent of what is owed for covered services.

Cost sharing example

TIP: Some benefits, like preventive services, are paid 100% by Blue Cross with no copay. Take advantage of your preventive services to stay healthy and minimize your out-of-pocket health care costs. Learn more about preventive services at bcbsm.com.

Like this blog? Here are some other articles to help you understand your health insurance:

For more health insurance tips visit bcbsm.com/101 or follow the hashtag #Covered101 on our social channels. If you have a specific question, please submit your query online through our Customer Action Center

Photo Credit: Ken Teegardin, Infographic: Center for Public Health Practice & Leadership at UC Berkeley