HCR 202 Week 1 Health Insurance Concepts and Plan Types Example

One Knee MRI, Four Health Plans: How Premiums, Deductibles, Copayments and Networks Change What a Patient Owes, Explained for a Family Practice Front Desk

[Student Name]

University of Phoenix

HCR/202: Medical Insurance

Week 1 Assignment

[Instructor Name]

[Date]

The practice, the patient and the prices are composites written for a model paper; national figures and plan limits come from the sources listed.

A composite 48-year-old patient at a four-physician family practice was referred for an MRI of her knee after a fall. Three weeks later she called, upset, about a bill for $1,200. Her friend had the same scan and paid $50. The front desk could not explain the difference, because it depended on details of her health plan that no one had checked. This paper explains the basic concepts of health insurance and the main plan types, then works through her MRI under four different plans to show why patients with the same service can owe very different amounts.

Premium

The premium is what a person or employer pays each month to keep coverage, whether or not care is used. KFF (2025) reported that in 2025 the average annual premium for employer-sponsored coverage was $9,325 for single coverage and $26,993 for family coverage, with workers contributing an average of $6,850 toward family premiums.

Allowed Amount

The allowed amount is the maximum a plan will pay for a covered service, set by contract with in-network providers. If the practice charges $1,500 and the plan allows $1,200, cost sharing is calculated on $1,200 and the in-network provider writes off the $300 difference.

Deductible

Until a patient has spent a set sum on covered care in the plan year, most plans pay nothing toward it; that sum is the deductible. The average general deductible for single coverage in 2025 was $1,886, and 34% of covered workers had a deductible of $2,000 or more (KFF, 2025). Many plans cover preventive care before the deductible.

Copayment and Coinsurance

Cost sharing after the deductible takes two forms. With a copayment, the plan sets a flat dollar figure the patient hands over for a given service, whatever the service costs, for example $25 at each primary care visit. With coinsurance, the patient instead owes a share of the allowed amount, for example one fifth, so the bill grows with the price of the service. Some plans use both, a copayment for visits and coinsurance for imaging and surgery, which is one reason patients find their bills hard to predict.

Out-of-Pocket Maximum

The out-of-pocket maximum is the most a patient pays in a year for covered in-network services, including deductibles, copayments and coinsurance, but not premiums. After it is reached, the plan pays 100%.

Network

A network is the group of providers under contract with a plan. In-network providers accept the allowed amount; out-of-network providers may bill patients the difference unless protections apply. Since 2022, federal surprise billing rules have protected patients from balance bills for most emergency care and for certain out-of-network care at in-network facilities, and they give uninsured and self-pay patients the right to a good faith estimate before scheduled care (Centers for Medicare & Medicaid Services, n.d.).

Health Maintenance Organization

Members generally must use in-network providers, except in emergencies, and usually need a referral from their primary care physician to see a specialist. Premiums and cost sharing are often lower. In 2025, 12% of covered workers were in HMOs.

Preferred Provider Organization

Members can see in-network or out-of-network providers without referrals, paying more out of network. PPOs are the most common type, covering 46% of workers with employer coverage.

Exclusive Provider Organization and Point-of-Service Plans

An EPO covers only in-network care, like an HMO, but usually without referrals. A POS plan combines HMO-style referrals with some out-of-network coverage; 9% of covered workers were in POS plans.

High-Deductible Plans and Health Savings Accounts

High-deductible health plans with a savings option covered 33% of workers in 2025. For 2026, a plan must have a deductible of at least $1,700 for self-only or $3,400 for family coverage to qualify for a health savings account, with out-of-pocket limits of $8,500 and $17,000 and contribution limits of $4,400 and $8,750 (Internal Revenue Service, 2025). A high-deductible plan does not make care more expensive; it makes the patient pay for more of it sooner.

The Worked Example

The MRI's allowed amount is $1,200, and the patient has had no other care this year.

Plan A, an HMO with a $150 copayment for imaging and no deductible for imaging: she owes $150.

Plan B, a PPO with a $1,000 deductible and 20% coinsurance: she pays the first $1,000, then 20% of the remaining $200, or $40, for a total of $1,040.

Plan C, an EPO with a $50 imaging copayment after a $500 deductible that applies to imaging: she pays $500, then $50, for $550, assuming the plan applies the copayment after the deductible.

Plan D, a high-deductible plan with a $3,000 deductible: she pays the full $1,200, which she may pay from her health savings account.

Her friend's $50 came from a plan like C after meeting the deductible earlier in the year. The patient's $1,200 bill matched Plan D, which her employer had adopted in January.

Why Plan Design Matters to the Practice

Plan design changes the practice's work as well as the patient's bill. Patients in high-deductible plans owe more at the time of service, so the practice collects a larger share of its revenue from patients rather than insurers, which is slower and less certain. HMO patients need referrals on file before specialist services, so missing referrals cause denials. And patients unhappy about bills they did not expect may leave the practice. Explaining costs before a service, not after, protects both the patient relationship and the practice's cash flow.

What the Front Desk Should Ask

Before scheduling an expensive service, staff should verify five things: whether the plan is active, the patient's deductible and how much has been met, the copayment or coinsurance for the service, whether prior authorization or a referral is needed and whether the imaging center is in network. A cost estimate given in advance would have turned the patient's complaint into a planned expense.

Conclusion

Premiums, allowed amounts, deductibles, copayments, coinsurance, out-of-pocket maximums and networks together determine what patients owe. Plan types differ mainly in their networks, referral rules and cost sharing, and high-deductible plans now cover a third of workers with employer coverage. The same MRI can cost $150 or $1,200, and front desk staff who understand why can prepare patients before the bill arrives.

References

Centers for Medicare & Medicaid Services. (n.d.). No Surprises: Understand your rights against surprise medical bills. https://www.cms.gov/nosurprises

Internal Revenue Service. (2025). Revenue Procedure 2025-19. https://www.irs.gov/pub/irs-drop/rp-25-19.pdf

KFF. (2025). 2025 employer health benefits survey. https://www.kff.org/health-costs/report/2025-employer-health-benefits-survey/