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Footnotes
- “2024 Employer Health Benefits Survey,” KFF.org, October 9, 2024. Continue at 1
How health plan costs work
What you pay for health care isn’t a set amount 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 — keeps your health coverage active. If your employer provides your coverage, this fee will come out of your paychecks. If you buy a plan yourself, you’ll pay this fee each month.
How much will your plan cost each month? Every plan is different. The average monthly cost of a health plan for an individual covered through their employer is $746.1
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 when you get care.
Know what you’ll pay for care
Each health plan covers a different amount for different services, which affects how much you’ll pay for medical care. Your health plan will explain how much it will pay for certain medical services and how much you’ll need to pay. The money you pay for care is called your out-of-pocket costs. Here are some of the most common out-of-pocket costs:
Deductible:
The amount you need to spend on health care services each year before your plan covers any costs. You may not 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
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
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 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.
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Cost estimate tool
Learn how much you could pay for your care and services.
Benefit summary
Your benefit summary tells you what your plan covers.
Know how these costs work together to find the right health plan
Once you understand the different health plan costs, you can search for a plan that gives you the right coverage for your health needs and fits your budget.
If you expect to need only routine checkups, you may choose a higher-deductible plan with a lower monthly fee. You’ll pay the full cost of your care until you meet your deductible, but with fewer care costs, you may spend less each year than if you had higher monthly payments.
If you plan on using your health care a lot — for example, if you have an ongoing health condition — you may want to pay a higher monthly fee. You’ll have more coverage and lower out-of-pocket costs.