Affordable healthcare 101: Copays, deductibles, and more

There are many terminologies and various technical aspects of your current health insurance plan. Some rarely dealt with, and others more commonplace. Here is a short guide to help you understand some of the more basic terms associated with your marketplace health plan.


Although the topic of health insurance and affordable healthcare in America has become one rife with political rhetoric and confusion, one realizes that before the political division associated with the ACA, persisted a widely-accessed product/service that when pressed, most everyday folks struggled to fully understand what exactly health insurance was and is, how healthcare coverage actually works, and so on.


I will be the first to admit that due to its sheer complexity and many, many moving parts, it would certainly take more than one article or blog post to fully unpack even the most basic aspects of your health insurance plan.


That being said, here are some basic terms (and their definitions) you ought to know when it comes to your current health insurance plan:


Premiums/monthly payments

The amount you pay for your health insurance every month. This amount can be reduced substantially with a premium tax credit/subsidy.


What are copays?

A copayment or copay is a fixed amount for a covered service, paid by a patient to the provider of service before receiving the service. A fixed amount ($20, for example) you pay for a covered health care service after you've paid your deductible.


What is a deductible?

A deductible is an amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself.


After you pay your deductible, you usually pay only a copayment or coinsurance for covered services. Your insurance company pays the rest.


Though:


  • Many plans pay for certain services, like a checkup or disease management programs, before you've met your deductible. Check your plan details.

  • All Marketplace health plans pay the full cost of certain preventive benefits even before you meet your deductible.

  • Some plans have separate deductibles for certain services, like prescription drugs.

  • Family plans often have both an individual deductible, which applies to each person, and a family deductible, which applies to all family members.

Generally, plans with lower monthly premiums have higher deductibles. Plans with higher monthly premiums usually have lower deductibles.


Coinsurance

The percentage of costs of a covered health care service you pay (20%, for example) after you've paid your deductible.


Let's say your health insurance plan's allowed amount for an office visit is $100 and your coinsurance is 20%.


  • If you've paid your deductible: You pay 20% of $100, or $20. The insurance company pays the rest.

  • If you haven't met your deductible: You pay the full allowed amount, $100.


Learn more about coinsurance payments


Out-of-pocket maximums and Annual limits

The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits.


The out-of-pocket limit doesn't include:

  • Your monthly premiums

  • Anything you spend for services your plan doesn't cover

  • Out-of-network care and services

  • Costs above the allowed amount for a service that a provider may charge


The out-of-pocket limit for Marketplace plans varies, but can’t go over a set amount each year.


For the 2021 plan year: The out-of-pocket limit for a Marketplace plan can’t be more than $8,550 for an individual and $17,100 for a family.

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