Many people ask, “How much will I have to pay for my healthcare each year?” This guide will help you understand out-of-pocket costs including deductibles, coinsurance, and copays so you can plan ahead.

What are out-of-pocket costs?

Out-of-pocket costs are what you pay for healthcare for services that your insurance doesn’t fully cover. These expenses include:

Deductible: The amount you pay before insurance starts helping with costs.
Coinsurance: Your share of the remaining bill after meeting your deductible.
Copays: A fixed amount you pay for certain services, like doctor visits or prescriptions.
Non-Covered Services: Services not included in your plan that you must pay for yourself.

Each health insurance plan specifies different amounts for each of these costs, so it’s important to check your policy, especially before scheduling major medical procedures.

What is an out-of-pocket maximum?

An out-of-pocket maximum is the most that you will pay for covered medical expenses per year. This includes deductibles, coinsurance, and copays. Once you reach this maximum, your insurance company will cover all additional eligible medical costs

To estimate the high-end of your medical expenses for the year, use your out-of-pocket maximum. However, remember that some services, like elective cosmetic procedures and wellness treatments, may not be covered.

Deductible

A deductible is the amount you pay each year for medical services or medications before your health insurance starts sharing costs. It is separate from your monthly premium, which is the fee you pay to have health insurance.

Generally, most costs for covered, in-network healthcare services, including doctor visits, hospital stays, lab tests, and surgeries, count towards your deductible, but not premiums or copayments.

Many preventative services do not require a deductible meaning that your insurance will cover those services even if you haven’t met the deductible yet. Preventative services examples include annual screenings and vaccinations.

A definition of deductible: The amount you pay each year for medical services or medications before your health insurance starts sharing costs.

Deductible Example

Your yearly deductible is $1,000.

You have a doctor’s visit costing $200. You pay the full $200 because you haven't met your deductible yet.
A few months pass, you have surgery costing $4,000. You pay the first $1,000 to meet your deductible. Your insurance company pays the remaining $3,000.
Later in the same year, you get some lab tests done. You receive a bill for $500. Since you’ve already met the deductible for the year, your insurance company pays the full $500.

How Do I Choose My Deductible?

Your deductible choice depends on your health needs and budget. Higher deductibles usually mean lower monthly premiums, and lower deductibles mean higher monthly premiums.

If you are young and healthy and don’t expect many medical expenses, a lower-premium, higher-deductible plan might be a good choice.
If you need frequent medical care, a higher-premium, lower-deductible plan can help reduce your out-of-pocket costs over time.

Deductible Tips

Stay In-Network: You can often reduce your deductible costs by using in-network providers rather than out-of-network providers and hospitals. If possible, before visiting a provider, check if they are in your network by calling your insurance company or using their website.

Plan Major Procedures: If you know you’ll need a significant medical service, schedule it after meeting your deductible to reduce costs.

Coinsurance

Once you meet your deductible, coinsurance kicks in. This means that you share medical costs with your insurance company.

For example, if your health insurance has a 20% coinsurance, you will pay 20% of the covered medical expenses, and your insurance will pay the remaining 80%.

A definition of coinsurance: The percentage of medical costs you share with your insurance company after meeting your deductible.

Coinsurance Example

Let’s say you have a $1,000 deductible and 20% coinsurance. If you receive a $5,000 medical bill with no additional copays, your costs would break down like this:

First, you pay the $1,000 deductible.
Then, you pay 20% of the remaining $4,000 ($800).

In total, you pay $1,800, and your insurance covers the rest.

Copays

A copay is a set fee you pay for certain medical services, like doctor visits or prescriptions. Your copay is listed on your health insurance card and is paid at the time of the service.

A definition of copay: A set fee you pay for certain medical services, like doctor visits or prescriptions.

Copay Example

You have a $40 copay for doctor visits.

When you see your doctor, you pay $40 at the front desk.
If no extra tests or treatments are needed, insurance covers the rest.

Not all services have copays. Some preventative services will have no out-of-pocket expenses depending on your plan. Other services will require coinsurance and/or count toward your deductible.

Non-Covered Services

Some medical services are not covered by insurance, meaning you must pay the full cost. These often include:

Cosmetic procedures (e.g., plastic surgery that isn’t medically necessary)
Some alternative therapies (e.g., massage, chiropractic care, naturopathy)
Certain medications not included in your plan

Check your policy or talk to your insurance agent to see what services are covered.

Summary

Understanding deductibles, coinsurance, and copays can help you manage healthcare costs. Since every health insurance plan is different, reviewing your benefits and planning for medical expenses can help you stay financially prepared.

If you have questions or need help choosing the right plan, contact us at 541-426-4208 to schedule an appointment!

How Much Will I Pay for Healthcare?: A Guide to Out-of-Pocket Costs