Understanding Your Health Insurance Costs

Premium: The amount you pay for your health insurance every month. For example, you might pay $100 each month for an individual plan.

Deductible: The amount you pay for covered health care services before your insurance starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. Some plans pay for certain health care services before you’ve met your deductible – for example, all Marketplace health plans must cover certain preventive services without charging you a copayment or coinsurance, even if you haven’t yet met your yearly deductible.

Copayment: A fixed amount you pay for a covered health care service (like a doctor’s visit, hospital outpatient visit, or prescription drugs). This often applies after you’ve paid your deductible. For example, you might pay a $15 copay for primary care visits and a $35 copay for specialty care visits.

Coinsurance: The percentage of costs of a covered health care service you pay. This often applies after you’ve paid your deductible. For example, if the health insurance plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your 20% coinsurance payment would be $20. The health insurance plan pays the rest.

Out-of-Pocket Limit:The most you have to pay for covered essential health benefits in a plan year. After you spend this amount on deductibles, copayments, and coinsurance, your health plan pays 100% of the costs of covered essential health benefits. The out-of-pocket limit doesn’t include your monthly premiums. It also doesn’t include anything you may spend for services your plan doesn’t cover.

Premium Tax Credit: A tax credit you can use to lower the cost of health insurance when you enroll in a plan through a Health Insurance Marketplace. Eligibility for the premium tax credit is based on the annual household income and other eligibility information you put on your Marketplace application. Using projected household income and other eligibility criteria, you may be able to receive advance payments of the premium tax credit (APTC) that reduce your monthly premiums. If at the end of the year you’ve received more APTC than you’re eligible for based on your actual annual household income and other eligibility criteria, you may have to pay back the excess when you file your annual federal tax return. If you’ve received less APTC than the premium tax credit you qualify for, you may the difference back as a credit on your federal tax return. Remember to update the Marketplace if your household income or family size changes, since this may affect your eligibility for APTC and PTC. Visit HealthCare.gov to learn more about what changes to report.

Cost-Sharing Reductions: A reduction in the amount you have to pay for deductibles, copayments, and coinsurance. In a Health Insurance Marketplace, cost-sharing reductions are often called “extra savings.” Cost-sharing reductions are generally available to eligible enrollees with a household income up to 250% of the federal poverty level. If you qualify, you must enroll in a plan in the Silver category to get the extra savings. If you’re a member of a federally recognized tribe, you may qualify for additional cost-sharing benefits. For more information on Silver plans, please visit: https://www.healthcare.gov/ choose-a-plan/plans-categories/. To review eligibility information, please visit: https://www.healthcare. gov/lower-costs/.

Essential Benefits: A set of 10 categories of services health insurance plans must cover under the Affordable Care Act. These include doctors’ services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and more. Some plans cover more services. Plans must offer dental coverage for children. Dental benefits for adults are optional. Specific services may vary based on your state’s requirements. You’ll see exactly what each plan offers when you compare plans. To see the full list of essential health benefits that Marketplace plans cover, visit https:// http://www.healthcare.gov/coverage/what-marketplace-plans-cover/

Preventative Services: Routine health care that includes screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems. Most health plans must cover a set of preventive services — like certain shots and screening tests — at no out-of-pocket cost to you. This includes plans available through a Health Insurance Marketplace and is true even if you haven’t met your yearly deductible. Note: to receive these services at no additional cost, make sure to get them from a doctor or other provider in your plan’s network. To learn what preventive services are available at no outof-pocket cost to consumers, visit HealthCare.gov/coverage/preventive-care-benefits or review the preventive services resources on the From Coverage to Care website, go.cms.gov/c2c or https://www. healthcare.gov/preventive-care-adults/ for more specifics on covered services.

High Deductible Health Plan: A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes.The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family. (This limit doesn’t apply to out-of-network services.)

Health Savings Account: A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you can lower your overall health care costs. An HSA can be used only if you have a High Deductible Health Plan (HDHP) — generally any health plan (including a Marketplace plan) with a deductible of at least $1,350 for an individual or $2,700 for a family. When you view plans in the Marketplace, you can see if they’re “HSA-eligible.” For 2018, you can contribute up to $3,450 for self-only HDHP coverage and up to $6,900 for family HDHP coverage. HSA funds roll over year to year if you don’t spend them. An HSA may earn interest, which is not taxable. Some health insurance companies offer HSAs for their high deductible plans. Check with your company. You can also open an HSA through some banks and other financial institutions.

Medical Savings Account: A Medicare Medical Savings Account (MSA) plan is a type of Medicare Advantage plan that combines a high-deductible health plan with a medical savings account. Enrollees of Medicare MSA plans can initially use their savings account to help pay for health care, and then will have coverage through a high-deductible insurance plan once they reach their deductible. Medicare MSA plans provide Medicare beneficiaries with more control over health care utilization, while still providing coverage against catastrophic health care expenses. In Demonstration MSA plans, some MSA provisions are waived to make the plans more like other consumer-directed health plans, such as health savings accounts (HSAs) available in the private sector.


Definitions from the Department of Health and Human Services 
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