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How a Typical Healthcare Plan Works

March 2, 2022
a health insurance application with a stethoscope and calculator

Is there anything more confusing and frustrating than trying to understand healthcare insurance coverage? Health insurance is like a maze in which many people easily become lost.

At Walk-in Dermatology, we’ve heard – and tried our best to answer – just about every conceivable question related to healthcare coverage. The questions all have one theme in common: who pays for what, when, and how much?

So we’ve put together a basic explanation of coverage and benefits under many common types of healthcare plans. Your plan will probably differ slightly, but this blog should give you a good idea of how most plans work. It’s important that you contact your insurance carrier for information regarding your specific healthcare plan.

At the start of a new plan year

When a new plan year takes effect, typically on January 1, the clock starts all over again on your healthcare plan. You are responsible for 100% of the cost of your covered health services until you reach the plan deductible. The amount of the deductible varies depending on the insurance carrier and other factors, but the national average hovers around $1,600 per person. This means your insurance carrier won’t pay any benefits until you’ve paid the full deductible amount for healthcare services during the plan year. Many plans offer exemptions for preventive services, wellness checkups and the like. For these visits you may only need to cover your copay, which brings us to…

Visits to a healthcare provider

You are usually required to pay a fixed fee, commonly referred to as a “copay,” whenever you see a healthcare provider or fill a prescription. A typical copay for a routine visit to an in-network healthcare provider’s office ranges from $15 to $25; for a specialist, the copay averages $30 to $50; for urgent care, $75 to $100; and for treatment in an emergency room it can jump to $200 to $300. Copays for prescription drugs depend on the medication and whether it’s a brand-name or a generic.

When you reach your deductible

Finally! The deductible threshold has been met. Now a typical healthcare plan begins to cover a percentage of the cost of covered healthcare services. This is known as co-insurance. You will typically pay 20% of the cost and your healthcare plan will pay the remaining 80%. This amount varies based on the healthcare plan.

Once you reach the out-of-pocket threshold

The out-of-pocket threshold is the most you will pay for covered healthcare services during the plan year. This includes copays and co-insurance. Once this amount is reached, your healthcare provider typically pays 100% of the cost of covered services.


If your healthcare ID card states “referral required” then your primary care provider needs to send an electronic referral before you make an appointment with a specialist. Without this referral, you could end up responsible for the cost of seeing the specialist.

Prior authorization

If your healthcare plan requires prior authorization before certain services or prescriptions are covered, you or your in-network care provider may need to get approval in advance. Call the number on your ID card to contact a representative with your healthcare plan to determine if prior authorization is required for the services or medications you need. It is your responsibility to know if you require prior authorization for a particular service.

A final tip

As the plan year draws to a close and you’ve reached your maximum out-of-pocket expense, if you’ve been putting off a visit to your dermatologist or other specialist, it’s now a good time to schedule that appointment before the year runs out. Otherwise, once a new plan year begins, the clock resets and you’ll be stuck with paying the full out-of-pocket amount all over again before your plan provides 100% coverage.

Let Walk-in Dermatology Take Care of You and Your Skin

If you have concerns about any skin condition and need dependable answers fast, you don’t have to wonder, worry or wait. Walk-in Dermatology is here to keep you healthy. Our team of dermatologists and experienced healthcare staff will address your concerns and provide the necessary care for all your skin conditions. We can set up a Video Visit and even prescribe medications remotely, or you can schedule an appointment with us online. The choice is yours. But don’t wait until the problem gets worse. Contact us today.