Key ideas

1. The premium is the price of the plan. You pay it every month, even if you never see a doctor. It does not count toward your deductible or out-of-pocket maximum.
2. You pay the deductible before coinsurance starts. In the example, Leo pays the first $1,500, then 20% of the rest. A $5,000 bill costs him $2,200.
3. The out-of-pocket maximum is your yearly ceiling. Once your deductible, copays and coinsurance reach it, the plan pays 100% of covered in-network care until the plan year resets.

Vocabulary

Insurance deductible

The amount you pay yourself on a covered loss or medical bill before your insurance starts to pay.

Emergency fund

Cash set aside only for surprises like a job loss, a car repair or a medical bill. A common goal is 3 to 6 months of essential costs.

Explanation of benefits

A statement from your health insurer that shows what a provider billed, what the plan paid and what you owe.

Work it out

Leo has an example plan with a $1,500 deductible, 20% coinsurance and a $5,000 out-of-pocket maximum. He has paid nothing toward his deductible this year when a $5,000 in-network bill arrives.

1. In-network bill
2. Leo pays the deductible
3. Left after the deductible
4. Coinsurance rate
5. Deductible
6. Coinsurance (20% of $3,500)
7. Leo pays
8. Plan pays ($5,000 − $2,200)

Check yourself

1. Your plan has a $1,000 deductible and 20% coinsurance. You haven't met the deductible. What do you pay on a $3,000 in-network bill?

   • A. $600
   • B. $1,000
   • C. $1,400
   • D. $3,000

2. Which payment does not count toward your out-of-pocket maximum?

   • A. Your monthly premium
   • B. Your deductible
   • C. Your coinsurance

3. What happens after you reach your out-of-pocket maximum?

   • A. You pay a higher coinsurance rate
   • B. The plan pays 100% of covered in-network care for the rest of the plan year
   • C. Your deductible starts over
   • D. Your premium stops

Your turn

Log in to your plan or find its summary of benefits and coverage. Write down your premium, deductible, coinsurance, copays and out-of-pocket maximum, and check how much of the deductible you have met this year.