Making Sense of Health Plan Costs

One of the most asked questions in health care is: how much does it cost? Between premiums, deductibles, coinsurance, and copays, it’s not always easy to navigate. One-quarter (25%) of insured adults said that it was somewhat or very difficult to understand specific terms that their health insurance uses such as “deductible,” “copay,” “coinsurance,” “prior authorization,” or “allowed amount,” according to a KFF consumer survey.

Health care costs can feel complicated, but understanding how your plan works can help you make informed choices and avoid surprises. From monthly premiums to doctor visits and prescriptions, knowing what to expect helps you plan for care and manage your expenses confidently.

Understanding Health Plan Cost Terminology

First things first, it’s important to know what each cost-related term means.  

• Premium: The amount you pay every month to be insured by your plan.  
• Deductible: The amount you pay for covered services before your plan starts to pay its share of the costs.
• Copayment (Copay): A fixed fee you pay for certain doctor visits or prescriptions. Copays often apply regardless of whether you’ve met your deductible.
• Coinsurance: A percentage of the cost you pay after meeting your deductible.
• Out-of-pocket maximum: The most you’ll pay for covered services in a year. Once you reach this limit, your plan pays 100% of covered costs.
• Plan Allowance: The maximum amount your health plan will pay for a covered service. It may also be called the “allowed amount,” “negotiated rate,” or “contracted rate.” For in-network providers, this is a negotiated rate agreed upon between your plan and the provider. 
  
  For example, your in-network primary care provider may charge a total of $100 for a visit. They agree to charge you your copayment of $15 and bill the remaining $85 to the Compass Rose Health Plan, and we reimburse the contracted rate.
  
  When going out-of-network, there isn’t a negotiated rate. In this case, your plan determines a plan allowance based on what it considers a reasonable charge for the service. You may be responsible for any amount the provider bills above this allowance, in addition to your deductible and coinsurance.

When you receive covered services throughout the year, you typically pay either a copayment or coinsurance. So how do you know which you pay? Each plan is different, but copays are usually for routine or common services, such as primary care visits, specialist visits, urgent care, or generic prescription drugs. While coinsurance usually applies to higher-cost services, such as hospital stays, surgeries, or certain diagnostic and imaging tests.

Even with copays, deductibles, and coinsurance, your spending is capped by your out-of-pocket maximum. In most cases, once you reach this limit, your plan pays 100% of covered services for the rest of the year — including services that normally require a copay or coinsurance. Most members don’t reach this limit, but it provides protection if unexpected or high-cost care is needed.

Example scenario: You visit an in-network specialist and pay a $30 copay. Under your plan, this fixed fee applies regardless of whether you’ve met your deductible. The provider also orders basic diagnostic tests, which cost $200 total. If your plan covers 70% after your deductible, you pay any remaining deductible plus any coinsurance amount left after the deductible is met. So, if you’ve met your deductible, you would pay 30% of the $200 test cost ($60). If you’ve reached your out-of-pocket maximum, you pay nothing.

Choices that Factor Into Out-of-Pocket Costs 

Several factors can affect your out-of-pocket costs, including whether you’re using an in-network provider or receiving a covered service.

Network Providers 

Choosing an in-network provider generally saves you money. In-network providers have a contract with your plan and agree to limit what they charge. When you use an in-network provider, your share of covered costs typically includes only your deductible and coinsurance or copay. Out-of-network care may cost more — or might not be covered at all.

Some plans also offer different copay tiers within the network. For example, members of our Standard Option pay lower copays when visiting a Premium Care Physician.

Covered Services

Your plan may cover a variety of services, including doctor visits, specialist care, hospital care, lab tests, and prescriptions. Coverage details vary by plan, so it’s important to know which services are covered and whether pre-authorization is required to help avoid unexpected costs.

Plan Type 

Not all health plans are designed the same way. Some have higher monthly premiums but lower costs when you get care, such as smaller copays or a lower deductible. Others may have a lower premium but higher out-of-pocket costs when you use services.

It’s important to think about how often you expect to need care, the prescriptions you take, and your budget. A plan with a higher premium may save you money overall if you use health care frequently. On the other hand, if you rarely need care, a plan with a lower premium might make more sense — even if it means paying more when you do visit the doctor.

Navigating Prescription Drug Costs 

Most health plans use a formulary to determine which drugs they cover and what tier they fall into. The tier a drug is in helps decide your out-of-pocket costs:

• Generics (Tier 1): Usually the lowest copay/coinsurance  
• Formulary/Preferred Brand Name (Tier 2): Moderate copay/coinsurance  
• Non-Formulary/Non-Preferred Brand Name (Tier 3): Higher copay/coinsurance  

Being aware of your plan’s formulary can help you manage prescription costs. Choosing medications on a lower tier — like generics — can reduce what you pay at the pharmacy.  

Depending on your plan, you may also be able to take advantage of savings opportunities at network pharmacies or through home delivery. For example, all Compass Rose Health Plan members can receive three months of maintenance medications for the cost of two months through Optum Home Delivery®.  

Compass Rose Health Plans at a Glance 

If you’re a Compass Rose Health Plan member, you may be wondering how all of the concepts we’ve covered apply to your specific plan. Let’s look at how these costs play out in everyday scenarios to give you a clearer picture of what to expect.  

We offer three plans, each designed to fit different health care needs and budgets. Here’s a quick overview:

Standard Option

• Lower monthly premiums
• Higher out-of-pocket costs
• In-network care only

The Standard Option may be ideal for someone who wants to keep monthly health costs low and doesn’t anticipate needing frequent care.

High Option

• Higher monthly premiums
• Lower out-of-pocket costs
• Flexibility to go in or out of network  

The High Option plan may be best if you’re looking for robust healthcare coverage that meets the needs of your entire family.

Medicare Advantage Option

• Combines our High Option plan with Medicare Parts A and B
• $0 out-of-pocket costs for covered medical services
• $125 monthly Medicare Part B premium subsidy

Compass Rose Medicare Advantage, a UnitedHealthcare® Group Medicare Advantage (PPO) plan, is designed for those who want an all-in-one plan with benefits exclusively for retirees.

Real-Life Scenarios: What You Could Owe 

To put these costs into perspective, here are a few real-life examples of what you might owe under 2025 Compass Rose Health Plan coverage. These scenarios show how copays, coinsurance, and deductibles work together.

Scenario 1: Sick Visit with a Prescription  

You’re not feeling well, so you schedule a visit with your in-network primary care provider (PCP).  After examining you, your doctor diagnoses strep throat and prescribes a covered medication to help with the infection. Here’s what you would pay under each plan:

Standard Option:

• $10 copay for a Premium Care Physician, or $35 for a non-Premium Care Physician
• $5 copay for a typical course of a generic antibiotic
• Total = Up to $15 copay (with Premium Care Physician)

High Option:

• $15 copay for the sick visit
• $5 copay for a typical course of a generic antibiotic
• Total = Up to $20 copay

Compass Rose Medicare Advantage:

• $0 copay for the sick visit
• $5 copay for a typical course of a generic antibiotic
• Total = Up to $1 copay  

Scenario 2: Surgical Procedures  

After a sports injury, you tear your ACL and need knee surgery to get back to your usual activities. Your orthopedic surgeon schedules the procedure at an in-network facility, and your plan gives you prior approval. Let’s say the plan allowance for the surgical procedure is $15,000. Here’s what you would pay under each plan:

Standard Option:

• You pay 30% of the plan allowance
• Total = $4,500 plus any remaining deductible

High Option:  

• 10% of the plan allowance (no deductible)
• Total = $1,500

Compass Rose Medicare Advantage:

• $0 copay for surgical services
• Total = $0

Scenario 3: Out-of-Network Care

You’re out of town and develop a painful ear infection. You find the closest urgent care center, but it isn’t in your plan’s network. Since you need care quickly, you decide to go anyway. The total bill is $250.

Standard Option:

• There is no coverage for out-of-network care. You pay the full cost for services.
• Total = $250

High Option:

• You pay 30% of the plan allowance plus any amount the provider charges above the allowance.
• Total = $75 plus difference between billed amount and plan allowance

Compass Rose Medicare Advantage:

• You can see a provider outside of the network, as long as they accept Medicare and our plan. This means the doctor agrees to treat you and bill UnitedHealthcare for services.
• Total = $0

Understanding your plan helps you make informed choices and avoid surprises. Remember to:

• Review your plan materials regularly
• Take advantage of in-network care and preventive benefits
• Reach out for help if you have questions

By seeing how your plan works in everyday situations, you can feel more confident in managing your health care costs.

The Compass Rose Medicare Advantage Plan is insured through UnitedHealthcare Insurance Company or one of its affiliated companies, a Medicare Advantage organization with a Medicare contract. Enrollment in the plan depends on the plan’s contract renewal with Medicare. Benefits, features and/or devices vary by plan/area. Limitations and exclusions apply.