How does health insurance work?

Here is an example of how insurance cost-sharing works:

Let’s assume you have health plan with a $1,000 deductible, 20% coinsurance, and a $6,000 out-of-pocket maximum.
 
Deductible: If you incur a $50,000 medical bill, you will first need to pay your $1,000 deductible.

That would leave you with $5,000 in cost-sharing left before you reach your plan’s $6,000 out-of-pocket maximum.

Coinsurance: With 20% coinsurance, you would pay $1,000 for every $4,000 paid by your insurance company.

That means, for the next $25,000 in covered medical expenses you would pay $5,000 and your insurer would pay $20,000.

Out-of-pocket maximum: Once you’ve paid your $1,000 deductible and $5,000 in coinsurance, you’ve reached your $6,000 out of pocket maximum.

Altogether, with this $50,000 medical bill, you will have paid $6,000 and your insurer will have paid the remaining $44,000.

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