Affordable Care Act
What You Need to Know About Out-of-Pocket Costs
Published on October 07, 2015
VIDEO: What should you know about Obamacare’s out-of-pocket costs?
An eHealth survey of its customers who buy their own health insurance found that one-in-three used their coverage for medical care that was not preventive in nature. Many of these had to pay out of pocket towards their medical bills.
On average they spent $2,700 in out-of-pocket costs, even though they had health insurance!
It’s no wonder that, according to the survey, only 27% of those who spent more than $5,000 out-of-pocket toward medical care felt that they were valued by their insurer, and a mere 15% of those who spent $2,000 or more on prescription drugs felt valued.
If you want to be happy with your health plan, you need to make sure you pick the right plan and that you understand how out of pocket costs work. In this article we’ll help you do that by answering the following questions:
- What are out-of-pocket costs and how do they work?
- What’s the difference between a copayment, a deductible, and coinsurance?
- Are there limits to your out-of-pocket costs?
- Do out-of-pocket costs vary between different kinds of plans?
- How can you avoid unexpected out-of-pocket costs?
- Why should you shop for health insurance at eHealth.com?
What are out-of-pocket costs and how do they work?
Let’s clear up a common misconception first. Your monthly premium – that is, what you pay to the insurance company to keep your coverage in effect – is not what we mean by an out-of-pocket cost.
Yes, monthly premiums come out of your pocket too. But when insurance companies refer to out-of-pocket costs, they mean the money that you’re required to contribute toward your costs when you actually receive medical care.
There are three kinds of out-of-pocket costs you should understand:
1. Copayments. A copayment, or copay, is a fee that you may be required to pay when you do something like visit the doctor or pick up a prescription drug from the pharmacy.
Copays often come in the $15-$50 range, depending on your health insurance plan and the kind of service you received.
2. Deductibles. A deductible is a specific dollar amount you may have to pay toward certain kinds of covered medical care before the insurance company begins picking up the bill.
Some plans have no annual deductibles, others may have deductibles of $5,000 or higher. During the 2015 open enrollment period, deductibles for plans purchased through eHealth averaged $4,120 for individuals and $7,760 for families.
But don’t be too scared of your deductible. Remember that annual checkups, women’s health visits, and certain preventive screenings are often covered by the insurance company even if you haven’t fulfilled your deductible.
3. Coinsurance. It’s pronounced “co-insurance” and it’s usually expressed as a percentage. For example, if you have 20% coinsurance on a $100 medical bill, you may have to pay $20 out of pocket for that bill.
A lot of people are confused by coinsurance or don’t know what it is. They’re often frustrated to learn that even after paying their full deductible for the year, they may still have to pay coinsurance for covered medical care.
Are there limits to your out-of-pocket costs?
With all these different forms of cost-sharing, it’s good to know that the Affordable Care Act places limits on your out-of-pocket costs each year.
Unfortunately, these limits are rather high. $6,600 is the highest amount an individual could be asked to contribute to his or her covered medical costs in 2015. $13,200 is the limit for a family covered under a single plan in 2015.
Most people never reach their maximum out-of-pocket limit, but it serves to keep your personal expenses in check in case of a serious medical diagnosis or a long-term hospitalization.
Do out-of-pocket costs vary between different kinds of plans?
When shopping for a new health plan, remember that out-of-pocket costs can differ significantly between different plans.
Generally speaking, plans assigned a higher “metal level” (for example, platinum and gold-level plans) have lower out-of-pocket costs. They tend to come with higher monthly premiums instead. If you’re someone who sees the doctor often or uses expensive prescription drugs, it might make sense go with one of these plans.
On the other hand, bronze or silver level plans tend to have lower monthly premium but higher out-of-pocket costs. If you rarely see the doctor and don’t use expensive prescription drugs, one of these plans may suit you fine. Just be sure you could pay your out-of-pocket limit in case of an emergency.
How can you avoid unexpected out-of-pocket costs?
You can avoid unexpected out-of-pocket costs by doing your research and picking the right health insurance plan for your personal needs and budget. It’s not as hard as it sounds!
The Obamacare open enrollment period for 2016 health insurance plans runs from November 1, 2015 through January 31, 2016. It may be your only chance to get health insurance coverage for 2016.
When looking over your 2016 coverage options, look beyond the monthly premiums associated with each plans. Look at the out-of-pocket costs you could face as well, and think about how likely you are to see the doctor or need prescription drugs.
Since articles like this can only provide you with general information, always check the plan benefits of any plan you are considering to make sure you understand how the plan works and if it suits your needs.
For personal insight and advice, work with a licensed agent like eHealth during open enrollment. It doesn’t cost anything extra. eHealth’s licensed agents can help you find the best plan for your personal needs and budget and avoid any nasty surprises when you see the doctor and face out-of-pocket costs.
Why should you shop for health insurance at eHealth.com?
When you shop for coverage at eHealth.com during the 2016 open enrollment period, you’ll get:
- Subsidies: In most states, eHealth can help you apply for government subsidies that can significantly lower your monthly premiums. You’ll get the same subsidies you would qualify for through a government website, with a superior customer experience. Subsidies are only available for qualified applicants, primarily based on income.
- Service: Our website makes shopping for coverage simple, and we have licensed agents available to provide you with personal help and advice when you need it, at no extra cost to you. At eHealth we’ve been selling health insurance online for more than 16 years and we’re rated A+ with the Better Business Bureau.
- Selection: eHealth offers a huge selection of quality health insurance plans from brand-name insurance companies nationwide. In most states, eHealth offers health plans available through government exchanges, PLUS other Obamacare health plans that are only available outside government exchanges.
Why shop anywhere else? Subsidies. Service. Selection. eHealth makes Obamacare easy!
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- What You Need to Know About Obamacare Open Enrollment