If you are not familiar with health insurance then the costs of a health insurance plan can seem to be a little bit complicated and many people are surprised that, having shelled out what seems like a fortune, they find themselves faced with a bill the first time that they make a claim. So before you are landed with a substantial medical bill therefore, it would be a good idea to take a minute to learn just what type of costs you should expect to incur on your health insurance plan.

The first and probably most obvious cost is the monthly premium or, if you so choose, the quarterly or annual premium. If you are enrolled in a union or employer’s group plan then you will usually be asked to meet only a percentage of the premium and this will generally be deducted from your pay check.

The majority of health insurance plans also include an annual deductible which is an amount of money which you will be required to pay before the insurance company starts paying out on any claims. So, with an annual deductible of $1,000 you will need to pay the first $1,000 of any medical bills every year before the insurance company will start paying out. You might be familiar with paying a deductible from your experience with motor insurance and, if this is the case, will also know that the more the deductible on your plan the lower your premiums will be. Also, if you have a family plan then this will typically include deductibles for each family member covered by the plan.

Most policies will also include a co-payment which is a fixed sum of money which you will be required to pay towards every medical bill. Exactly how much you will be required to pay in co-payments will depend to a large extent on the type of plan which you hold. For example, co-payments on HMO plans are generally less than those on indemnity plans. In addition, the co-payment will also vary between different forms of medical service and, if you have an HMO plan, will usually rise if you are treated outside of the HMO network.

In cases where a co-payment is not required you will often find that this is replaced by co-insurance which is similar and is an amount of money, this time expressed as a percentage, which you will again need to pay towards every medical bill. A common co-insurance ratio is 80/20 which means that the insurance company will pay 80% of each medical bill while you pay 20%. As for co-payments, co-insurance will generally rise if, as an HMO plan holder, you are treated outside of the HMO’s network. In this case you may also find that, when a claim exceeds what is considered by the insurance company to be ‘reasonable and customary’, you might be required to meet the additional cost.

By this time you will realize that comparing health insurance plans is about a great deal more than just comparing premiums. Accordingly, it is extremely important that you read the details of any quote most carefully and avoid the frequent temptation to simply choose the plan which has the lowest monthly premium.

If you wish to keep costs down and are a member of an HMO plan then you should try to stay within the HMO’s network and, where you do feel that it is necessary to go outside the HMO’s network, then compare the actual cost of treatment to what the insurance company considers ‘reasonable and customary’ before you undergo treatment.

It is also possible to keep your costs under control on many plans by raising or lowering your deductible and by selecting higher or lower co-insurance. Just how this can be achieved is beyond the scope of this particular article but is a matter of balancing the various different costs involved against the likelihood of needing to claim against your plan.