Your Guide to ICHRA and Health Coverage Basics

You pay this amount each month to have your health insurance plan whether you use it or not. In general, the lower your monthly premium is, the higher your out-of-pocket costs will be if you do become ill or injured.

These are amounts you will pay, in addition to your premium, if you require medical care. There are four key terms that define how you’ll pay for medical expenses throughout the year, which are deductibles, copayments, coinsurance, and out-of-pocket maximums.

This is how much you have to spend for covered health services before your insurance company pays anything (except free preventive services). For example, if your deductible is $1,000, you will pay the first $1,000 in medical bills out of your own pocket. Each time you pay a medical expense, it will count towards your deductible, and once you’ve reached your deductible, your insurance will begin to pay the majority of the remaining medical expenses.

Your deductible is reset at the beginning of each plan year. Plans with low premiums generally have higher deductibles. People with high deductible plans should still put some money aside, so they’re prepared to pay their deductible, if necessary

The most you have to spend for covered services in a year. After you reach this amount, the insurance company pays 100% for covered services. The out-of-pocket maximum or limit doesn’t include your monthly premiums. It also doesn’t include anything you spend for services your plan doesn’t cover like out-of-network care and services, and costs above the allowed amount for a specific service.

The out-of-pocket limit can’t go over a set amount each year.

Copayments (or co-pays) are a type of coinsurance, only they are a flat fee rather than a percentage. You usually pay copayments when you check-in at a doctor’s office or other medical facility unless you’re receiving free preventive care services. A copay is often a small amount (like $20 for a typical doctor’s visit).

Some plans allow you to pay a low copayment for certain types of care even if you haven’t yet met your deductible. These plans often cost a bit more but might be a good choice if you know you’ll go to the doctor a few times each year.

This is the percentage of the expense that you are responsible to pay, after you met your deductible. For example, suppose your plan has 20% coinsurance, you’ve already paid your deductible, and you need a $10,000 surgery. You would pay a maximum of $2,000 and your insurance would pay the rest.

Most insurance plans have a separate group of doctors that participate in a Provider Plan Network. There are 4 major plan network types. Understanding the network type and making sure your doctor is “in network” are important factors when picking your health insurance plan.

When you shop for health insurance, you’ll see plans grouped into four “metal” categories — Bronze, Silver, Gold, and Platinum. These tiers were created under the Affordable Care Act to help make it easier to compare coverage options

Each metal level represents how you and the plan share costs for essential health benefits.

The category you choose affects what you’ll likely pay throughout the year, including your monthly premium, deductible, copayments, coinsurance, and out-of-pocket maximum.

Think of these tiers as a starting point to guide your search:

• Bronze or Silver plans usually have lower monthly premiums but higher costs when you get care. These may be good options if you’re generally healthy and don’t expect frequent medical visits.

• Gold or Platinum plans have higher monthly premiums but lower out-of-pocket costs when you receive care. These may be better if you see the doctor often or manage ongoing conditions.