Understanding Your Healthcare Coverage. Who Pays for What … and When?

You visit your doctor and show your insurance card … and they tell you there’s a $25 copay.

You get a prescription filled and the pharmacist says you owe $30, even with insurance.

You have a medical procedure and receive a bill for $300 after your insurance coverage is factored in.

What’s going on here? If you have health insurance, what exactly are you paying for?

Healthcare coverage, like many other forms of insurance, doesn’t entirely eliminate your costs. It’s a shared responsibility with your insurer, and understanding how it works can be confusing sometimes.

Generally, healthcare costs when you have insurance are sorted into three basic steps:

  1. Your costs: With the start of each new plan year, you pay for your healthcare services until you meet your deductible – a pre-determined amount that must be reached before your insurer begins sharing your healthcare costs.

  2. Shared costs: Once you’ve reached your deductible amount, you insurer will start to cover a certain percentage of your healthcare costs, called your coinsurance, until you reach the maximum amount that you or your family pay during a benefit period – an amount called your out-of-pocket maximum. You also continue to cover any applicable copays during this period.

  3. Insurer costs: Once you’ve reached your out-of-pocket maximum, your insurer pays all covered costs for the rest of the plan year. When the next plan year begins, so does this three-step cycle.

The easiest way to find out what your copay, deductible, and out-of-pocket amounts are is to ask your insurer or employer for a summary of benefits and coverage, or SBC. This document shows how you and your insurance plan share costs for covered health care services, and it will list specific amounts related to your coverage.

Once you know which costs you are responsible for, you can take steps to save money by choosing the most affordable healthcare options that suit your preferences and needs.