Estimating Your Medical Costs

HealthCue co-founders Traci Richards and Stephen Schuster help you map out future medical costs, and answer your health insurance questions.

To decide which health insurance plan is best for you, you need to determine how much you will be spending on medical care in the future. There are two ways to estimate your future costs:

  1. Starting from scratch and estimating how much you will probably spend using average costs for the medical procedures you think you'll need.

  2. Looking at your Explanation of Benefits (EOBs) from last year to see what medical coverage you required, and guessing that the next year will be similar.

If you're starting from scratch, first list all the doctor visits, hospital visits (such as out-patient surgery), prescription drugs, laboratory tests, immunizations, x-rays, or other medical services you may seek in the next year. Then, multiply your expected number of visits, prescriptions, etc. by the average costs in the table below. (For quick explanations of terms like EOBs, co-pay, deductible, and co-insurance, check out our Health Insurance Glossary.)

  • Doctor Visits (co-pay) - $30 per visit

  • Prescription Drugs (co-pay) - $10 per prescription (generic), or $40 per prescription (name brand)

  • Prescription Drugs (out-of-pocket) - $40 per prescription

  • X-rays, CT Scans or MRIs - $300 per procedure

  • Laboratory Tests - $85 per test

  • Hospitalizations (average - 5 days) - $5,000 per hospitalization

  • Out-Patient Surgeries - $2,000 per surgery

While these estimates are general, they'll give you a good idea of how much you might expect to spend in a generic health insurance plan.

If you have been enrolled in a health insurance plan for the past year, the second--and more accurate--way to estimate your medical costs is to examine your "EOBs," or explanation of benefits. Whenever you receive medical service from a provider, your health insurer sends you an EOB explaining how much your insurer paid to the provider, and how much you must pay. EOBs contain five critical pieces of information that will help you accurately estimate your future expenses.

  1. The Negotiated Amount - This is a column on each EOB that tells you what amount a health insurer has agreed to pay your medical provider for the medical service you received. Multiply the Negotiated Amount by the number of visits or services of that type you expect to receive. This gives you a more accurate estimate than using the average costs in the table above.

  2. The Deductible Status - Every EOB has a column that gives you the status of your deductible. By looking at your previous EOBs, you can determine whether you used all or just a portion of your deductible during the previous year. By knowing how much deductible you used the previous year, you may be able to change your deductible for the coming year. Usually if you increase your deductible, you will pay lower premiums.

  3. Co-Pay - The EOB will have a column that indicates what the co-pay is for each medical service you receive. For instance, every time you visit the doctor or pay for a prescription drug, you are charged a co-pay. For doctor visits, this is usually $20 per visit. For prescription drugs, the co-pay varies between $10 and $50 per drug. This may be important if you need prescription drugs for chronic conditions or diagnostic testing services that usually require a higher co-pay.

  1. Co-Insurance - The EOB will have a column that tells you if co-insurance has been applied to a medical service you have received. Co-insurance is the percentage of a medical claim your insurer pays after applying the co-pay and the deductible. Most insurance policies pay 80% to 90% of each claim after the co-pay and deductible is applied, leaving you to pay 10%. You need to know what services have co-insurance (many X-rays, CT scans, MRIs, and out-patient procedures have co-insurance) to estimate your future medical expenses. If co-insurance applies to a particular medical service you will need, take this into account when estimating your future costs.

  2. Total Patient Responsibility - The EOB will contain a column or category that states all of the costs for medical services not paid for by the health insurer. This is the amount you must pay out-of-pocket for the medical services. If you add your co-pay to the amount listed in the Total Patient Responsibility column, you can determine the exact amount you paid for a particular service, and use that amount to estimate your future out-of-pocket expenses.

Using the table above, or better yet, your own EOBs, you can get an accurate estimate of your future medical expenses. In our next column, we will show you how to use your estimated expenses to find a co-pay, deductible, and co-insurance that fits the most cost effective premium for you, and the health insurance that best fits your needs.