Health Insurance Costs

Even after understanding the basics of health insurance, it can be confusing to determine how the health plan you choose impacts your out-of-pocket costs. This makes it tough to estimate and budget for health care expenses.

To help you choose the best health plan for your budget and your needs, it is important to understand a bit about health insurance. This graphic explains how health insurance works. Some key terms are also defined below the graphic.

Infographic detailing how health insurance costs work based on deductibles, copays, coinsurance and out of pocket maximums

Premium: this is the amount you pay each month for your health insurance coverage. Your premium does not count toward your deductible or out-of-pocket maximum.

Deductible: this is the amount of money you must pay for health care services each year before the plan will start paying for all or part of the services.

Copay: after you meet your deductible, you’ll pay a copay or coinsurance for covered services.

Out-of-pocket maximum: if you reach your out-of-pocket maximum, you’ll pay nothing for your care for the remainder of the plan year. The plan will pay 100 percent of your covered medical expenses.

What impacts the amount you pay for health insurance?

When it comes to health insurance, there are a few factors that can affect your costs. Your age, family size and where you live can all play into the amount you pay for your health insurance coverage.

Your age: premiums can be up to 3 times higher depending on your age. Typically, older people pay more than younger ones.

Location: where you live can have an impact on your health insurance costs because of local competition, state rules and cost of living.

Smoking: if you smoke tobacco, insurers may charge you up to 50% more than others who do not use tobacco.

Family size: if your plan covers your spouse and/or children, you may pay more for coverage.

What does not impact the amount you pay for health insurance?

Gender: health insurance companies can’t charge more or less based on your gender.

Pre-existing conditions: all health plans must cover treatment for pre-existing conditions once coverage starts.

Learn more about what impacts the cost of your health insurance.