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How Much Does Health Insurance Usually Cover?

How Much Does Health Insurance Usually Cover? | Very Good Coverage

Without health insurance, there’s no limit to how much you could pay. But with health insurance, you only pay a given amount and the insurer will cover the rest.

Health insurance policy terms and conditions can be quite confusing. In most cases, it can be difficult to know what’s covered and what’s not covered as well as the amount or the percentage that your health insurance covers. In this article, we’ll go through the importance of having health insurance while highlighting the amount that you’d have to pay for each metal tier. We’ll also look at the average healthcare cost for 2021 and the amount that your insurer is likely to pay.

Health insurance plans usually cover between 60% and 90% of your covered expenses. This is after you pay between 10% and 40% of the costs as copayments or coinsurance. It will depend on the type of plan that you have and the amount of premium and deductibles that you pay.

The information in this article comes from eHealth, as well as data derived from the reliable financial data site ValuePenguin. We’ve double-checked the information to ensure that it’s accurate and trustworthy and can guide you when looking for the best health insurance for you.

The Importance of Having Health Insurance

It’s always not easy to plan ahead and know exactly what your health care bills might be, especially during emergencies. Without health insurance coverage, you could be exposed to astronomical costs that could probably leave you in deep debt or even bankruptcy. Again, it’s very easy to underestimate the costs of medical care.

But here are a few perfect examples to think about:

  • Fixing a broken can cost you up to $7,500 with insurance and up to $30,000 without insurance.
  • Comprehensive cancer care usually costs hundreds of thousands of dollars but the cost can be affordable if you have health insurance.
  • The average cost of staying in the hospital for three days is generally around $30,000.

In essence, health insurance coverage can provide important financial protection from high and unexpected costs if you get involved in an accident or become seriously sick. It does this by helping you pay for doctor visits, prescription drugs, hospital stays, and essential preventive care.

Knowing Your Max and Choosing the Right Plan for You

When signing up for health insurance, you should receive a statement of benefits explaining everything about your coverage. But before that, you should do thorough research and choose a plan in the marketplace that suits your situation. These plans are categorized in metal tiers, which are based on how you and your health insurance plan split costs.

Generally, there are 4 metal tiers namely:

  • Catastrophic
  • Bronze
  • Silver
  • Gold, and
  • Platinum

With that in mind, let’s look at the amount of cover that the above-mentioned plans cover and what you are expected to pay.

Plan Category The Percentage that the Insurer Pays The Percentage that You Pay
Catastrophic 10% 90%
Bronze 60% 40%
Silver 70% 30%
Gold 80% 20%
Platinum 90% 10%

Which Health Insurance Plan is Right for You?

When choosing the right plan for you based on how much the insurer covers, it’s important to understand the different types of health insurance plans. They include:

Bronze Plan

The insurer will pay 60% of the covered healthcare expenses while you cover the remaining 40%. This means that you’ll pay very low monthly premiums but will have to face among the highest out-of-pocket costs when in need of care. In other words, you’ll have to pay thousands of dollars in deductibles before your health insurance coverage kicks in.

This can be ideal for you if you want cost-efficient health insurance coverage but may have to face astronomical medical bills should you need care. It can be a good choice if you’re young, in great shape, and do not anticipate very many health issues during the year.

Here’s an example of what you’ll cover and what the health insurance will cover if you have a Bronze plan.

Claim Breakdown Your Responsibility Insurer's Responsibility
Total amount of claim = $1,000 $20 copay for doctor visit $0
Deductible maximum = $200 $200 $0
Co-insurance maximum of the remaining cost $312 (40% of the remaining $780 ) $468 (60% of the remaining $780)
Total $532 $468

Explanation of the Above Example:

You pay copay at your doctor’s office visit, which is deducted first: $1,000-$20 = $980. You then subtract the deductibles: $980-$200 = $780. Under the Bronze plan, you’ll be responsible for 40% of the coinsurance (40% of $780) = $312. Your insurance company will be responsible for 60% of coinsurance (60% of $780) = $468. You’ll, therefore, be responsible for $20+$200+$312 = $532 while the insurance company will be responsible for $468.

Silver Plan

The insurer will pay 70% of the covered healthcare expenses while you cover the remaining 30%. This plan comes with moderate monthly premiums as well as moderate out-of-pocket expenses whenever you need care. The deductibles are generally much lower than the deductibles of a Bronze plan.

The best part of this plan is that you qualify for cost-sharing reductions depending on your income level and family size. This is actually the only plan that allows you to apply for additional savings that may help you reduce costs and may end up saving thousands of dollars annually.

Although the monthly premiums of a Silver Plan may be slightly higher than those of a Bronze Plan, you’ll pay much lower out-of-pocket costs whenever you need care. It can be an ideal choice if you qualify for extra savings.

Here’s an example of what you’ll cover and what the health insurance will cover if you have a Silver plan.

Claim Breakdown Your Responsibility Insurer's Responsibility
Total amount of claim = $1,000 $20 copay for doctor visit $0
Deductible maximum = $200 $200 $0
Co-insurance maximum of the remaining cost $234 (30% of the remaining $780 ) $546 (70% of the remaining $780)
Total $454 $546

Explanation of the Above Example:

You pay copay at your doctor’s office visit, which is deducted first: $1,000-$20 = $980. You then subtract the deductibles: $980-$200 = $780. Under the Silver plan, you’ll be responsible for 30% of the coinsurance (30% of $780) = $234. Your insurance company will be responsible for 70% of coinsurance (70% of $780) = $546. You’ll, therefore, be responsible for $20+$200+$234 = $454 while the insurance company will be responsible for $546.    

Gold Plan

The insurer will cover 80% of your medical care costs while you cover the remaining 20%. This plan comes with higher monthly premiums and low out-of-pocket costs when you need care. This plan is ideal if you anticipate various medical issues during the year.

Here’s an example of what you’ll cover and what the health insurance will cover if you have a Gold plan.

Claim Breakdown Your Responsibility Insurer's Responsibility
Total amount of claim = $1,000 $20 copay for doctor visit $0
Deductible maximum = $200 $200 $0
Co-insurance maximum of the remaining cost $156 (20% of the remaining $780 ) $624 (80% of the remaining $780)
Total $376 $624

Explanation of the Above Example:

You pay copay at your doctor’s office visit, which is deducted first: $1,000-$20 = $980. You then subtract the deductibles: $980-$200 = $780. Under the Gold plan, you’ll be responsible for 20% of the coinsurance (20% of $780) = $156. Your insurance company will be responsible for 80% of coinsurance (80% of $780) = $624. You’ll, therefore, be responsible for $20+$200+$156 = $376 while the insurance company will be responsible for $624.    

Platinum Plan

You’ll pay the highest monthly premiums but the lowest out-of-pocket costs whenever you need care. This means that you’ll be saving quite a lot if you are anticipating a lot of medical care during the year and can afford the high costs of monthly premiums.

Here’s an example of what you’ll cover and what the health insurance will cover if you have a Platinum plan.

Claim Breakdown Your Responsibility Insurer's Responsibility
Total amount of claim = $1,000 $20 copay for doctor visit $0
Deductible maximum = $200 $200 $0
Co-insurance maximum of the remaining cost $78 (10% of the remaining $780) $702 (90% of the remaining $780)
Total $298 $702

Explanation of the Above Example:

You pay copay at your doctor’s office visit, which is deducted first: $1,000-$20 = $980. You then subtract the deductibles: $980-$200 = $780. Under the Platinum plan, you’ll be responsible for 20% of the coinsurance (10% of $780) = $78. Your insurance company will be responsible for 90% of coinsurance (90% of $780) = $702. You’ll, therefore, be responsible for $20+$200+$78 = $298 while the insurance company will be responsible for $702.    

Catastrophic Plans

There are also catastrophic health plans that have very low monthly premiums and very high annual deductibles. These plans are ideal for people who do not plan on accessing health care very often and just want to have coverage in case of worst-case scenarios.

You, however, have to pay a big percentage (90%) of care yourself but will be covered if you have a major illness or injury and require intensive levels of care. Not everyone is eligible for catastrophic plans. You can only be eligible if:

  • You are aged below 30
  • You have a hardship exemption or affordability exemption

Here’s an example of what you’ll cover and what the health insurance will cover if you have a catastrophic plan.

Claim Breakdown Your Responsibility Insurer's Responsibility
Total amount of claim = $1,000 $20 copay for doctor visit $0
Deductible maximum = $200 $200 $0
Co-insurance maximum of the remaining cost $702 (90% of the remaining $780) $78 (10% of the remaining $780)
Total $922 $78

Explanation of the Above Example:

You pay copay at your doctor’s office visit, which is deducted first: $1,000-$20 = $980. You then subtract the deductibles: $980-$200 = $780. Under the Catastrophic plan, you’ll be responsible for 90% of the coinsurance (90% of $780) = $702. Your insurance company will be responsible for 10% of coinsurance (10% of $780) = $78. You’ll, therefore, be responsible for $20+$200+$702 = $922 while the insurance company will be responsible for $78.    

Comparing Average Health Insurance Costs for 2020 and 2021

The graphic below shows the average rates that a 40-year-old would pay for individual health insurances based on the metallic tiers. Keep in mind that the rates for older consumers are likely to increase based on the age scale that’s set per the federal guidelines.

Metal Tier 2020 Monthly Premiums 2020 Yearly Premiums 2021 Monthly Premium 2021 Yearly Premiums Yearly Changes 2021 Average Deductible for Individual Plan
Catastrophic $323 $3,876 $313 $3,757 -3.08% $8,550
Bronze $415 $4,980 $387 $4,638 -6.86% $6,957
Expanded Bronze $428 $5,136 $418 $5,017 -2.31% $7,381
Silver $560 $6,720 $539 $6,471 -3.71% $2,773
Gold $617 $7,404 $594 $7,125 -3.77% $1,781
Platinum $732 $8,784 $709 $8,504 -3.19% $944

These premiums are based on the analysis done by the financial data site ValuePenguin.

From the above graphic, it’s easy to note that the health insurance plans are inversely related to the amount of coverage that they provide. You also have to keep in mind that the individual health insurance cost may vary depending on your location.

Average Health Insurance Cost Based on Plan Type

Whether you choose HMO (Health Maintenance Organization), PPO (Preferred Provider Organization), POS (Point of Service), or EPO (Exclusive Provider Organization) your access to these plans will be managed in various ways.

Here are the costs for each plan for 2021. The costs are based on a 40-year-old individual but maybe a bit higher for older individuals.

Plan Type 2020 Monthly Premiums 2020 Yearly Premiums 2021 Monthly Premiums 2021 Yearly Premiums Yearly Changes in Percentage
PPO $561 $6,732 $517 $6,204 -7.86%
HMO $478 $5,736 $427 $5,124 -10.67%
EPO $492 $5,904 $469 $5,628 -4.68%
POS $508 $6,096 $462 $5,544 -9.04%
Gold $617 $7,404 $594 $7,125 -3.77%
Platinum $732 $8,784 $709 $8,504 -3.19%

Factors that May Affect Your Health Insurance Costs

The cost of your health insurance coverage may be affected by several factors as stipulated by the law. However, some states can limit how some factors affect your health insurance rates. For example, New York and California do not determine your health insurance costs based on tobacco use.

Some of the factors that may affect your health insurance costs include:

Where You Live

Health insurers may determine your health insurance costs based on the county or state that you live in. For example, a resident of Collin County in Texas may pay higher rates for the same policy than a resident in Hudspeth County.

Number of People Insured

Needless to say, the total cost of your health insurance is determined by the number of people covered in it. Every person’s age, as well as tobacco use, will also be taken into consideration. For instance, a family of three (two adults and one kid) will pay higher monthly premiums than an individual.  

Age

The cost of your health care will be set based on your age. The cost of covering children up to age 14 will cost a flat rate but the premiums will increase yearly from age 15. Similarly, your rates will increase as you get older and you may pay quite a lot if you are older.

Tobacco Use/Smoking

Smoking could mean that you pay up to 50% higher health insurance rates but there’s a maximum that’s determined by each state.

About THE AUTHOR

Greg McKnight

Read more about Greg McKnight

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