Your renewal letter came. Here is what to compare.

If your renewal letter shows a higher monthly premium, you are not alone. Premiums keep climbing, and I get a lot of calls this time of year from people who open the letter, see the new number, and stop reading.

Before you decide anything, read the rest of the letter. The premium is only one piece of what the plan costs you.

Why the premium alone misleads

The monthly premium is what you pay to keep the plan active. It says nothing about what you pay when you use it. A plan with a lower premium can leave you paying far more on the day you actually need care, and a plan with a higher premium can cost you less over a year if you use a lot of care.

So I look at the premium and the out-of-pocket costs together. Here is how I read them.

Deductible, coinsurance, and out-of-pocket maximum

These three work as a sequence.

Your deductible is the amount you pay before the plan starts paying its share. Coinsurance is the percentage you share with the insurance company after the deductible is met. The out-of-pocket maximum is the yearly cap: once you reach it, the plan pays the rest of your covered costs for the year.

Health insurance is not 100% coverage. On a large bill you still pay part. The out-of-pocket maximum tells you the most you could owe in a bad year, so compare it across plans, not just the premium.

Preventive care, and when a visit changes

Your annual checkup, wellness exam, immunizations, and routine screenings are covered at no cost to you. That stays true, so use them.

One thing catches people off guard. If your doctor finds an abnormality or a problem during a preventive visit, the visit becomes diagnostic. At that point it is likely subject to your copay or deductible.

What a copay covers

A copay is a set amount you pay toward the office visit. It covers your time with the doctor. Tests and services ordered during the visit are usually subject to the deductible. When you compare plans, a low copay can look cheaper than it is if you expect labs or imaging.

Prescriptions

Depending on the plan, insurance pays all or part of expensive prescription drugs. Plenty of common maintenance prescriptions are inexpensive at major retailers anyway, so coverage matters most when a drug is costly.

Pharmacy discount programs such as GoodRx can sometimes beat a plan's copay on certain generics. It is worth checking the price both ways before you pay at the counter.

Check your doctors and your prescriptions

This is the step people skip, and it is the one that hurts most. A renewal can change a plan's network or its list of covered drugs from one year to the next. Look up each doctor and each prescription you rely on in the new plan before you accept it. If your doctor is not in the network, or your drug is not on the formulary, the premium does not matter.

Your tax credit gets recalculated

If you buy through the marketplace, you may qualify for a premium tax credit that lowers your monthly payment. The credit depends on your household income, and it gets recalculated when you apply. A change in income can change what you pay, so do not assume last year's number holds. Explore Health, Oregon's new marketplace, does that calculation now. I explain the switch in Oregon is leaving HealthCare.gov, here is what Explore Health means for you.

Send me the letter

If the renewal looks confusing, send it to me. I will put your current plan next to the options for next year and show you the differences in plain terms: premium, deductible, out-of-pocket maximum, and whether your doctors and drugs are covered.

You can reach me through the contact page. For a broader look at how the pieces fit together, I wrote up how individual health insurance works.

If your carrier is leaving or cutting back in Oregon, that is a different situation, and I cover it in your carrier is leaving Oregon, here is what happens next.