What to know about health plan costs

Doctor speaking to patient in waiting room

This 4-part series covers health plan costs, including setting a budget, tips for saving money, and understanding medical care costs. Up first: the costs of a health plan.

What you pay for health care isn’t a set number each year. Here are a few basic health plan terms to help you understand your health care costs and choose the right health plan for your goals and budget.

Know what you’ll pay every month

Your monthly membership fee, often called a premium, is what keeps your health coverage active. If your employer provides your coverage, this fee will come out of your paychecks. If you purchase a plan yourself, you’ll need to pay this fee each month.

What can you expect to pay for your monthly fee? Each plan is different, but from 2018 to 2021, the average monthly cost of health coverage for an individual in the U.S. was between $340 and $525, depending on plan type and location.1

Your monthly payment affects what you’ll pay for care throughout the year. Generally, the higher your monthly fee is, the more your plan covers for medical care. Lower monthly fees may mean you’ll pay more of the costs for your care.

Know what you’ll pay for care

Each health plan covers a different amount for different services, which affects your out-of-pocket costs, or how much you’ll pay for medical care. Your health plan will give you information that explains how much they’ll pay for certain medical services and how much you’ll need to pay. Here are some of the most common out-of-pocket costs:

You pay the full cost of care until you reach your deductible. After you only pay copays and coinsurance.


The amount you’ll need to spend on health care services each year before your plan covers any costs. It’s possible you won’t reach your deductible — especially if you don’t get a lot of care — but you should be prepared to pay up to that amount.

copay illustration


A flat fee you pay for specific services covered under your health plan — even after you’ve reached your deductible. For example, your plan might include a $20 copay for doctor visits and a $10 copay for prescriptions, including generic and brand name medications

coinsurance illustration


A percentage you pay for specific services after you meet your deductible. For example, if a procedure costs $100 and your coinsurance is 20%, then you’ll owe $20. Coinsurance is often confused with copays, but they’re not the same — and some services may have both.

out of pocket illustration

Out-of-pocket maximum: 

The most you’ll pay for covered services each year. Once you reach it, your plan will pay 100% of covered services. But you’ll still need to pay your monthly fees and the cost of services that your plan doesn’t cover.

Person reading on a tablet

Know how these costs work together to find the right health care plan

Once you understand the different health plan costs, you can search for a plan that will give you the right coverage for your health goals and needs — and also one that will fit in your budget.

If you expect to need only routine checkups, you may choose a higher-deductible plan with a lower monthly fee. You’ll need to pay the full cost of your care until you meet your deductible, but with fewer care costs, you may spend less over the course of the year than if you had higher monthly payments.

If you plan on using your health care a lot throughout the year — for example, if you have an ongoing medical condition, plan to get a big surgery, or are having a baby — you may want to pay a higher monthly fee in exchange for more coverage and lower out-of-pocket costs.

And it’s important to remember you can’t always anticipate all your health needs. As they say, accidents happen. That’s why knowing your budget is so important. To help you manage your health care costs and prepare for the unexpected, check out the second article in this series: How to manage a health care budget.

1“Average Marketplace Premiums by Metal Tier, 2018-2021,” State Health Facts, KFF.org, accessed February 12, 2021, https://www.kff.org/health-reform/state-indicator/average-marketplace-premiums-by-metal-tier/