Standard Benefit Design CostSharing Description Chart
Why CostSharing Matters
Costsharing is the set of mechanisms that determine how much of a healthcare expense an employee pays versus the employers plan. Properly designed costsharing balances three goals:
- Affordability for members, especially those with lower incomes.
- Utilization control to discourage unnecessary services.
- Predictability for both employee and employer budgeting.
The chart below reflects a typical standard design used by many large employers in the UnitedStates. Specific dollar amounts and percentages may vary by plan, geography, and regulatory environment.
Standard CostSharing Elements
| Benefit Category | Deductible | Coinsurance | Copayment (Copay) | OutofPocket Maximum (OOPMax) | Notes |
|---|---|---|---|---|---|
| Individual Medical (Employee Only) | $1,500 per year | 20% after deductible | $30 office visit, $0 preventive | $5,500 | Family deductible is $3,000; OOPMax is $11,000. |
| Family Medical (Employee + Dependents) | $3,000 per year | 20% after deductible | $30 office visit, $0 preventive | $11,000 | Deductible is met once per family; OOPMax is per family. |
| Prescription Drugs Tier1 (Generic) | None | None | $10 per prescription | Counts toward medical OOPMax | Prior authorization not required. |
| Prescription Drugs Tier2 (Preferred Brand) | None | None | $35 per prescription | Counts toward medical OOPMax | Formularyapproved only. |
| Prescription Drugs Tier3 (Nonpreferred Brand) | None | None | $60 per prescription | Counts toward medical OOPMax | May require step therapy. |
| Prescription Drugs Tier4 (Specialty) | None | 30% after deductible | None | Counts toward medical OOPMax | Specialty pharmacy network required. |
| Emergency Room Visit | Deductible applies | 20% after deductible | None | Counts toward OOPMax | Outofnetwork ER visits reimbursed at 80% after deductible. |
| InNetwork Hospital Inpatient | Deductible applies | 20% after deductible | None | Counts toward OOPMax | Daily room rate capped at $500 after deductible. |
| OutofNetwork Hospital Inpatient | Deductible applies | 50% after deductible | None | Counts toward OOPMax | Higher cost share reflects network status. |
| Preventive Care (USPSTF A/B) | None | None | None | Does not count toward OOPMax | Covered 100% when delivered innetwork. |
How to Read the Chart
Deductible. The amount you must pay for covered services before the plan begins to share costs. The deductible resets each plan year.
Coinsurance. The percentage of costs you pay after the deductible is met. For example, a 20% coinsurance on a $1,000 procedure means you pay $200 while the plan pays $800.
Copayment. A fixed dollar amount you pay at the time of service (e.g., $30 for a primarycare visit). Copays are usually due even if the deductible has not been met.
OutofPocket Maximum. The most you will have to pay in a year for covered services. Once reached, the plan pays 100% of additional covered costs for the rest of the year.
Network Status. Innetwork services are delivered by providers who have contracted with the plan. Outofnetwork services generally cost more and may not count toward the OOPMax.
Impact on Employees
- Predictable Costs. Knowing copays and the OOPMax helps members budget for health expenses.
- Incentive for Preventive Care. Zerocost preventive services encourage early detection and lower longterm costs.
- Behavioral Influence. Higher coinsurance for specialty drugs steers members toward formulary alternatives when appropriate.
Employer Considerations
- Premium vs. CostSharing Tradeoff. Raising deductibles or coinsurance usually lowers premiums, but may increase employee turnover if costs become unaffordable.
- Compliance. Designs must meet ERISA, ACA, and statespecific regulations (e.g., minimum essential coverage, affordability thresholds).
- Wellness Integration. Pairing the standard design with a wellness program can mitigate utilization spikes and improve health outcomes.
Typical Scenarios
Scenario1 Routine Care
Emily has no chronic conditions. She visits her primarycare doctor for an annual checkup (preventive) $0 cost. Later she needs a prescription for a generic medication $10 copay. Her total outofpocket for the year remains low because preventive visits are free and the deductible is untouched.
Scenario2 Surgery
Mark requires an innetwork orthopedic surgery costing $15,000. He first pays the $1,500 individual deductible, then 20% coinsurance on the remaining $13,500 ($2,700). His total outofpocket for the procedure is $4,200, which counts toward his $5,500 OOPMax. After reaching the OOPMax, any additional covered services for the rest of the year are at $0 cost.
Scenario3 Specialty Medication
Laura is prescribed a Tier4 specialty drug priced at $5,000 per month. After meeting her deductible, she pays 30% coinsurance, i.e., $1,500 each month, until her OOPMax is reached. The plan covers the remainder, providing significant financial relief after the OOPMax threshold is hit.
Key Takeaways
- Costsharing aligns financial responsibility between employer and employee, encouraging responsible use of health services.
- The standard design combines a moderate deductible, 20% coinsurance, modest copays, and a clear outofpocket limit.
- Preventive care is fully covered to promote early detection and reduce longterm costs.
- Specialty drugs and outofnetwork services carry higher cost shares to steer members toward costeffective alternatives.
- Understanding each component helps employees anticipate expenses and enables employers to design competitive, compliant benefit packages.
Standard Benefit Design Cost Sharing Description Chart and Reference File Download Link
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