How Paying for Health Insurance and Healthcare Works (Health Insurance for LGBTQ Folks Ep. 3)

In the third episode of our Health Insurance for LGBTQ People series, we define common terms, explore how insurance cost-sharing works, and look at some example Summaries of Benefits and Coverage.

Time stamps:

1:02: What Are Insurance Premiums?

2:09: Review of Financial Assistance (Premium Tax Credit)

4:14: What Are Insurance Deductibles?

5:42: Cost-sharing (Copays and Co-Insurance)

7:26: What Is the Maximum Out-of-Pocket?

9:03: Review of Example Summaries of Benefits and Coverage:

9:21: Blue Value Silver Standard Plan

12:03: Oscar Silver Standard Plan

13:33: Aetna CVS Health Silver 10 Advanced Plan

14:39: Review of Sample Explanation of Benefits

Transcript:

Feeling Lost in Health Insurance Lingo?

Do you know what an insurance premium is? What about a deductible? Do you know the difference between a copay and co-insurance? If you’re already feeling overwhelmed, this episode is here to help.

Quick Recap: How People Get Insurance

In the last episode, we explored the different ways people in the U.S. get access to health insurance. Employer-sponsored coverage is the most common, but marketplace coverage is available to anyone who can’t get insurance through work, a family member, or a public program.

What We're Talking About Today

In upcoming episodes, we’ll focus on how to find a plan that works for you, how to access care, and how to ensure coverage for gender-affirming care. But first, we need to lay the groundwork by explaining the different costs associated with health insurance. By the end of this episode, you’ll have a better grasp on how to understand your insurance premium and how to read your medical bills.

Premiums: Your Monthly Subscription Fee

Your premium is the monthly fee you pay to have health insurance — think of it like a subscription. If you don’t pay it, you risk losing coverage, although insurers are required to give you a 90-day grace period. Many insurance providers offer autopay options, and setting that up is a great way to avoid accidentally missing a payment.

Premiums typically go up a little each year, and that’s partly due to your age — older individuals are considered higher risk. Fortunately, financial assistance, like the premium tax credit, helps offset some of that cost for many people.

Who Qualifies for Premium Tax Credits?

Premium tax credits are available to those earning up to 400% of the federal poverty line. For 2025, this translates to:

• Just over $62,000 for an individual

• About $128,000 for a family of four

The amount of assistance is calculated on a sliding scale, depending on your income and family size. When you fill out your application at healthcare.gov, be sure to include your estimated annual income to see what credit you’re eligible for. Also, check the box that lets the system verify if you qualify for Medicaid — this could save you time and effort later.

No Care? No Extra Costs

If you don’t use any healthcare services beyond preventive care — which is fully covered under the Affordable Care Act — you shouldn’t have to pay anything other than your monthly premium. But once you do start accessing care, you’ll see some other charges and terms, often listed on your Explanation of Benefits (EOB).

Understanding the Key Cost Terms

There are a few core stages that determine how much you’ll pay out of pocket, versus what your insurance will cover: your deductible, your cost-sharing phase (including copays and co-insurance), and your out-of-pocket maximum.

What’s a Deductible?

Your deductible is the amount you pay for healthcare services before your insurance starts sharing costs. On average, the deductible for employer-sponsored plans in the U.S. is around $2,000, though it varies widely for marketplace plans. Every time you go to the doctor or get a test, you might pay the full cost until you reach your deductible.

However, not all services require you to hit the deductible first — your Summary of Benefits and Coverage (SBC) will say things like “deductible does not apply” or “after deductible is met,” giving you a better sense of when costs kick in.

Copays and Co-insurance: Your Share After the Deductible

Once you’ve hit your deductible, you move into the cost-sharing phase. Here, your costs come in the form of copays and co-insurance.

A copay is a fixed dollar amount you pay for specific services. For example, a visit to your primary care doctor might cost $20 to $35, while seeing a specialist could cost $40 to $60. More advanced services like imaging or testing could range from $80 to $100.

Co-insurance is different — it’s a percentage of the total cost of the service. For example, you might pay 20% of the bill for a specialist or 10% for a primary care visit. Since it’s based on the provider’s total charges, the exact amount can be harder to predict. Fortunately, hospitals are required to make their pricing transparent, so you can check online to estimate your potential costs.

In-Network vs. Out-of-Network

Whether a provider is in-network or out-of-network can have a big impact on your costs. In-network providers have a contract with your insurance company, while out-of-network providers don’t — meaning you’ll likely pay more, or your insurance may not cover the service at all. Often, insurance plans use copays for in-network services and co-insurance for out-of-network care.

Out-of-Pocket Maximum: Your Annual Cap

The out-of-pocket maximum is the most you’ll have to pay in a calendar year for covered services. For 2025, this maximum is just over $9,000, but many plans offer slightly lower caps in the $6,000 to $8,000 range. Once you reach this number, your insurance will cover 100% of all eligible healthcare costs for the rest of the year.

Family plans often have both individual and total family maximums. Some plans may also set separate limits for in-network vs. out-of-network care.

Separate Drug Deductibles

Some plans include a separate deductible for prescription drugs, usually ranging from $200 to $500. Once you hit that number, your prescriptions are covered for the rest of the year. This drug deductible is typically separate from your main plan deductible.

Reading a Summary of Benefits and Coverage

Let’s look at how to read an SBC using a few real plan examples.

A Blue Cross Blue Shield silver plan from North Carolina lists a $5,000 deductible for individuals, with a steep $25,000 deductible for out-of-network care. The out-of-pocket maximum is $8,000 for in-network care. Primary care visits have a $40 copay; specialist visits are $80. Tests and imaging are covered at 60% after you reach your deductible. Emergency services are billed the same whether in- or out-of-network, which is required by law.

This plan does not include acupuncture or certain other services, so if those are important to you, you’d want to look for a different plan that covers them.

A plan by Oscar Health in Texas (an HMO) has almost no out-of-network coverage except for emergencies. It has a $5,750 deductible for individuals and nearly $9,000 out-of-pocket maximum. The tradeoff? It has very low copays for primary care and $0 for preventive services.

Lastly, a plan by Aetna CVS Health in Ohio offers a $0 deductible — meaning you go straight into cost-sharing — but it does have a $2,000 drug deductible. This plan can be great for someone who expects to use services throughout the year but wants to avoid paying upfront full costs.

Understanding Your Explanation of Benefits (EOB)

When you receive care, you’ll also receive an EOB. This is not a bill — it’s a breakdown of what was charged, how much your insurance covered, and what you might still owe. It also includes negotiated rates and the amounts not covered, which are usually written off and not your responsibility.

Your EOB will show how much of your deductible is still left, how much co-insurance applies, and how close you are to your out-of-pocket maximum. Your insurance portal is a great place to track this, and if anything looks confusing, call your insurance company — they’ll walk you through it.

Looking Ahead

Now that we’ve covered the most common (and confusing) health insurance terms, we’re ready to move on. In the next episode, we’ll take a closer look at the health insurance marketplace and how to compare plans to find one that fits your budget.