Conditions of health insurance will be known after the start of open registration

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It’s open enrollment season, a time each year that millions of American workers and retirees must choose a health plan, new or existing.

But choosing health insurance can be a dizzying enterprise. Health insurance plans are made up of many moving parts that may not be visible at first glance. And each has financial implications for buyers.

“It’s confusing and people have no idea how much they’re potentially going to pay,” says Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. She is also a doctor.

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A mistake can be costly; consumers are usually tied to their health insurance for a year, with a few exceptions.

Here’s a guide to the main components of health insurance costs and how they can affect your bill.

1. Prizes

The premium is the amount you pay your insurer each month for participating in a health plan.

This is perhaps the most transparent and understandable part of the cost of a health insurance plan – the equivalent of a fixed price.

According to report about employer insurance from the non-profit organization Kaiser Family Foundation. That’s $22,463 a year – $1,872 a month – for family insurance.

However, employers often pay a portion of these allowances for their employees, which greatly reduces costs. The average worker pays a total of $1,327 a year — or $111 a month — for individual insurance and $6,106 — $509 a month — for family insurance in 2022, taking into account the employer’s share.

According to KFF, your monthly payment may be higher or lower depending on the plan you choose, the size of your employer, your geographic location, and other factors.

Low premiums do not necessarily mean good value. You may be hooked on a large bill later if you see a doctor or pay for a procedure, depending on the plan.

“When you buy health insurance, people naturally buy, like most products, for the price,” said Karen Pollitz, co-director of KFF’s Patient and Consumer Protection Program.

“If you buy tennis shoes or rice, you know what you get for the price,” she said. “But people really shouldn’t just buy prices because health insurance is not a commodity.

“Plans can be very different” from each other, she added.

2. Surcharge

Many workers also have to pay a co-pay — a flat dollar fee — when they see a doctor. A “co-payment” is a form of cost-sharing with health insurers.

According to KFF, the average patient pays $27 for each GP visit and $44 for a specialist visit.

3. Coinsurance

Patients may incur additional costs such as co-insurance, a percentage of health care costs that the consumer shares with the insurer. This usually happens after you have paid your annual deductible (the concept is described in more detail below).

According to KFF, the average co-insurance rate is 19% for primary health care and 20% for specialized care services. The insurer will pay the remaining 81% and 80% respectively.

As an example, if a specialized service costs $1,000, the average patient will pay 20%—or $200—and the insurer will pay the rest.

According to the KFF, co-payments and co-insurance may vary by service, with separate classifications for office visits, hospitalizations, or prescription drugs. Rates and coverage may also differ between in-network and out-of-network providers.

4. Franchise

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Franchises are another common form of cost sharing.

This is the annual amount that the consumer must pay out of pocket before the insurance company starts paying for the services.

According to KFF, in 2022, 88% of workers covered by a health insurance plan will have a franchise. The average person with one insurance coverage has a deductible of $1,763.

A franchise is combined with other forms of cost sharing.

Here is an example based on a $1,000 hospital fee. A patient with a $500 deductible pays the first $500 out of pocket. This patient also has 20% coinsurance for $100 (or 20% of the remaining $500). This person will pay a total of $600 out of pocket for this hospital visit.

When you buy health insurance, people naturally buy, like most products, for the price.

Karen Pollitz

co-director of the Patient and Consumer Protection Program at the Kaiser Family Foundation

Health insurance plans can have more than one deductible — perhaps one for general health care and another for pharmacy benefits, Pollitz said.

Family plans can also assess deductibles in two ways: by pooling the combined annual out-of-pocket expenses of all family members and/or by giving each family member a separate annual deductible before the plan covers that member’s expenses.

The average deductible can vary greatly by plan type: $1,322 Preferred Provider Organization (PPO) plan; $1,451 in Health Care Organization (HMO) plan; $1907 point of service (POS) plan; and $2,539 in a high-deductible health plan, according to KFF’s unified coverage data. (See below for more on plan types.)

5. Maximum own funds

6. Network

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Health insurers treat services and costs differently depending on their network.

“Online” refers to doctors and other health care providers who are part of an insurer’s preferred network. Insurers sign contracts and negotiate prices with these intranet providers. This does not apply to “out-of-network” providers.

That’s why it’s important: Deductibles and maximum out-of-pocket payments are much higher when consumers seek help outside of their insurer’s network — typically around double the in-network amount, McClanahan said.

Sometimes there are no caps at all on the annual out-of-network service costs.

“Health insurance is really connected to the network,” Pollitz said.

“Your financial responsibility for leaving the network can be very serious,” she added. “It could expose you to serious medical bills.”

Some plan categories do not allow coverage for out-of-network services, with some exceptions.

For example, HMO plans are among the cheapest types of insurance, according to Etna. Among the trade-offs: The plans require consumers to choose doctors online and require a referral from their PCP before seeing a specialist.

Similarly, EPO plans also require network services for coverage, but usually offer more choices than HMOs.

POS plans require a referral to see a specialist, but allow some offline coverage. PPO plans typically have higher premiums but are more flexible, allowing out-of-network and referral visits.

“The cheaper plans have thinner networks,” McClanahan said. “If you don’t like doctors, you may not have a good choice and have to go offline.”

There is an overlap between high deductible health plans and other types of plans; the former typically have deductibles of over $1,000 and $2,000 respectively for individual and family insurance, and are paired with a health savings account, a beneficial way for consumers to save on future medical expenses.

How to put it all together

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Cheaper plans have thinner networks. If you don’t like doctors, you may not have a good choice and will have to leave the network.

Caroline McClanahan

Certified Financial Planner and Founder of Life Planning Partners

“Be mindful of first dollars and potential last dollars when choosing insurance,” McClanahan said, referring to upfront fees and cost sharing at the end.

Each health plan has a “summary of benefits and coverage” that provides key cost-sharing information and plan details that are consistent across all health insurance plans, Pollitz said.

“I would encourage people to spend some time with SBC,” she said. “Don’t wait an hour before the deadline to watch. The stakes are high.”

Also, if you’re currently using a doctor or network of providers you like, make sure those providers are covered by your new insurance plan if you’re considering switching, McClanahan said. You can check the insurance company’s online directory or call your doctor or health care provider to see if they accept your new coverage.

The same is true for prescription drugs, Sun said: will the cost of your current prescriptions change under the new health plan?

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