If you typically do not use routine health services often and are looking for a cheaper alternative to health insurance, a cost-sharing insurance plan may be an option to look out for. Cost-sharing plans are insurance plans that do not include premiums but have out-of-pocket costs including deductibles, co-payments, coinsurance, and other similar charges.
How Are Costs From Cost-Sharing Shared
There are two ways in which the employee and employed split these costs: through premium contributions and/or a mix of cost-sharing at the time of service.
Premium Contribution
If an employee chooses to enroll in a Premium Contribution plan, this means that the employer will deduct the monthly premium from each paycheck they receive. The employer then sends this money directly to the insurer. The benefit of a premium contribution plan compared to a normal non-cost-sharing plan is that there are no funds forfeited at the end of the year because it is a pre-tax payment.
A Mix of Cost-Sharing During Service
This option does not include a premium such as the Premium Contribution plan, but it does require paying a mix of costs at the time of service. Costs can include deductibles, copayments, and coinsurance fees. However, your specific plan may not feature all three types of payment.
The Most Common Forms of Cost-Sharing
Deductibles, copayments, and coinsurance are the most common form of payment when it comes to cost-sharing plans, but what exactly do these payments entail?
Deductible
A deductible is the initial payment a customer must pay before the plan’s coverage begins. The deductible is used to pay for most covered items and services that the enrollee may use. This is an annual fee that resets every time your insurance plan is renewed. Once you use your covered services, you will not need to pay the deductible again if it is within the same contract period. Instead, you would have to pay the copayments or coinsurance payments that you and your insurer have agreed on.
Copayment
A copayment is a fixed amount that the customer, or employee, agrees to paying to cover the cost of a medical item or service used. This cost is split between the insurer and the enrollee. Copayments are typically applied to physician visits or prescription drug costs and for one single service, the copayment typically does not cost a lot. For example, seeing a physician may result in a $20 copayment at the time of visit.
Coinsurance
A coinsurance is similar to a copayment but instead of a fixed dollar amount, it is a fixed percentage allowed for each service or covered medical item. The employee and employer split this cost at the time of service per the rates discussed prior. For example, if the client goes to a physician and needs to pay for a lab to be done or the visit itself, they will pay a fixed amount, such as 20%, and the employer will pay the remaining 80%.
What Isn’t Included in Cost-Sharing Services
There are also a few common features of “typical” insurance plans that are not available in cost-sharing services. These features include premiums, non-covered services, and out-of-network services.
Premium
A premium is what the enrollee pays for an insurance policy. Premiums can be looked at as a form of income for insurance companies. The amount of premium costs can range drastically and is dependent on your insurer, included services, and health history. However, cost-sharing plans do not include premiums since all costs are shared amongst the insurer and the enrollee through deductibles, copayments, and coinsurance.
Non-Covered Services
Non-covered services include all the medical items or services that are not included in your insurance plan. This means that your insurer will not cover these services or items and you will have to pay for these items fully out-of-pocket. Many times these services relate to optional work, such as cosmetic services. However, it is important to speak with your insurance provider to determine your covered and non-covered services.
Out-of-Network Services
Health insurance networks refer to all of the physicians, facilities, and medical professionals that are covered by your insurance. There healthcare workers and offices typically have ties to the insurance company that make processing payments and services much simpler and less costly. Cost-sharing services do not work with out-of-network providers and do not provide coverage for services or items done through them.
How Does The ACA Affect Cost-Sharing
The Affordable Care Act (ACA) allowed cost-sharing plans to be more affordable by exempting preventative health services such as many vaccines and cholesterol screening from any deductibles, copayments, or coinsurance. The ACA also introduced a cost-sharing subsidy. This makes cost-sharing plans more affordable each time you use the plan’s coverage, making the plan more accessible to low-income individuals.
Where to Purchase a Health Insurance Plan
Now that you know what cost-sharing is, what it entails, and if this is the right option for you and your lifestyle, it is important to know where you can find one of these plans. Cost-sharing plans can be found within the Health Insurance Marketplace. Use our online form to get a personalized quote and compare your plan options.
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