Understanding Health Insurance Costs in the Age of the Coronavirus (COVID-19)

A frustrated man at a desk attempts understanding healthcare costs per his healthcare plan
Understanding health insurance plans can be confusing for many Americans.

Editors note: many insurance companies have now made the commitment to waive fees associated with coronavirus testing and treatment. We are choosing to share this information anyways, in the hopes that it still provides educational value.

Health insurance is one of the most important investments we ever make as Americans. Illnesses, injuries, and other medical setbacks can be extremely expensive if hospital visits, surgery, or other serious measures are required. With 27.9 million uninsured Americans, it’s no surprise that only 9% of Americans truly understand health insurance plan terms and details.

With COVID-19 cases steadily increasing, it has become more and more necessary to understand what your health insurance plan will, and will not, cover in the event you do require medical treatment of any kind. The government has taken steps to ensure testing for the coronavirus is free of charge for everyone. And with the passing of Families First Coronavirus Response Act, coronavirus related doctor visits will be covered by all private insurers, public programs such as Medicare and Medicaid, and for the uninsured, without any cost to the patient.

While the test and associated doctors visit will be covered under this new legislation, the total healthcare cost of being treated for COVID-19 could still be monumental. This is especially true if you are admitted to the hospital.

Things to know about your health insurance plan

A doctor reviews a health insurance plan with a patient.
It is important to know what a health insurance plan covers before visiting a doctor.

It’s important to know what factors will determine how much you’re actually going to pay out of pocket for health care. These can be boiled down to seven major portions of your health insurance plan:


Health insurance premiums are your monthly bill. This monthly bill is how much you pay to have access to the plan, and it is completely separate from the amount you will pay if you receive a test or procedure from a doctor.


A deductible is how much you need to pay for health care services before your health insurance kicks in. In most plans, once you pay your deductible, you’ll still need to pay copays and coinsurance until you hit the out-of-pocket max, after which the plan pays for 100% of services.


A copayment, often shortened to just “copay,” is a fixed amount that you pay for a specific service or prescription medication. Copayments are one of the ways that insurers will split healthcare costs with you after you hit your deductible. In addition to that, you may have copayments on specific services before you hit your deductible. For example, many health insurance plans will have copayments for doctor’s visits and prescription drugs before you hit your deductible. You will pay copayments until you hit your maximum out-of-pocket amount.


Coinsurance is another way that health insurers will split costs with you. Unlike a copayment, coinsurance isn’t a fixed cost – it’s a percentage of the cost that you pay for covered services. For example, if you have a coinsurance of 20%, you’ll pay 20% of the cost of covered services until you reach your out-of-pocket maximum.

Maximum out-of-pocket amount

The maximum out-of-pocket amount, also called the out-of-pocket limit, is the most you’d ever have to pay for covered in-network health care services in a year. Payments made towards your deductible, as well as any copayments and coinsurance payments, go toward your out-of-pocket limit. Monthly premiums do not count.


This term refers to physicians and medical establishments that deliver patient services specifically covered under your insurance plan. In-network medical providers are the cheapest option for receiving services because insurance companies have typically negotiated lower rates with these providers. It is important to determine which providers (doctors, hospitals, out-patient centers) are in-network before deciding to seek care.


This term refers to physicians and medical establishments not covered under your insurance plan. Services from out-of-network providers are usually more expensive than  in-network providers because out-of-network providers have not negotiated lower rates with your insurer. When seeing an out of network provider, your coinsurance percentage will likely be higher, or the provider may not even be covered at all.

Putting this information into a timely example

A doctor attends to a patient trying to understand her healthcare costs.
Figuring out total healthcare costs for COVID-19 treatment is important.

Let’s say someone tested positive for COVID-19. The medical bills are $50,000. Health insurance may make a huge difference in the amount the patient will pay, but how does this all play out?

Details of the example health insurance plan:

  • Deductible for in-network providers: $3,000
  • Coinsurance for in-network providers: 20%
  • Yearly out-of-pocket maximum: $6,000

How it works for the patient if they see in-network providers:

  1. In this example, you must pay the first $3,000 (your deductible) before your plan begins to pay for any of your procedures or costs.
  2. After you have paid the $3,000 deductible, you pay 20% of your healthcare costs (the in-network coinsurance amount) until you reach your maximum out-of-pocket amount ($6,000). That means you are paying $20 for each $100 bill received for services until you have spent the full $6,000. Since the deductible counts towards the maximum out-of-pocket amount, $3,000 more must be spent to hit the $6,000 limit.
  3. Once you’ve paid $6,000, your health plan pays the rest of the cost for covered services you receive in-network.

Total amount you’d pay in this example:

  • Bill for services: $50,000
  • You pay: $6,000
  • Your plan pays: $44,000

The reality isn’t as clear as the example

In the above example, all the care received is from doctors and hospitals considered in-network. What if a person is forced to go out-of-network, or simply isn’t informed that the doctor who is treating them at the hospital is not in-network?

This is where large costs and surprise bills arise. Surprise billing is most likely to occur in an emergency when you have little to no control over who cares for you. Because so many people may face emergency situations and need immediate care in the ER or hospitalization, patients who contract the virus will face significant financial risk.

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