How Much Does It Cost to Go to Space? $6.25 Billion.

May 30, 2020, marks another historic moment in American space ingenuity as astronauts resume their march into orbit aboard American technology. I wanted to know: how much does it cost to go to space in 2020?

I came to a total of $6.25 billion, all in.

The landmark achievement rode the back of a private commercial success in SpaceX’s Dragon Capsule on Falcon rockets.

In this post, I’ll break down the total expenditures SpaceX has incurred to reach this success. While the ISS rendezvous had direct costs much smaller than $6.25B, it’s the milestone achievement that Musk has aimed for since the start.

So, what did it take to get here?

Astronauts, Made in the USA

Before I dive into the details of how much it cost to go to space once again, I’d like to review a little of what SpaceX has accomplished with NASA.

Two NASA astronauts, Douglas Hurley and Robert Behnken, recently completed their 19-hour trip to dock with the International Space Station (ISS). They’re riding in the Crew Dragon Capsule—or Dragon 2—in orbit around Earth.

The astronauts named their specific vehicle Endeavour, harkening back to the Space Shuttle they’re all too familiar with. The moment the Falcon rocket took off from Florida with its two American passengers was a milestone achievement in the Dragon concept that SpaceX started in 2005.

Sending Doug and Bob to the ISS via Crew Dragon.
Douglas Hurley and Robert Behnken on the way to Crew Dragon

Starting from Zero, Astronauts Reached Orbit Aboard Dragon in a Decade

The five year period after Dragon began saw significant development in Dragon’s underlying systems. Dragon’s first structural test flight was mid-2010, coinciding with the Falcon 9 rocket’s maiden voyage.

By December 2010, an operational test flight was launched with Dragon riding Falcon 9’s second flight.

In 2011, NASA began searching for private enterprise to continue missions to the ISS. NASA’s Space Shuttle program ceased in July 2011 with its last mission to the ISS for cargo delivery.

Not even two years after its initial operational test flight, Dragon saw its first goods transportation mission success as it docked with the ISS in 2012. Between then and now, Dragon has had many successful resupply missions to the ISS. Each time, the team behind Dragon learned a bit more about the capsule and how to further its mission to eventually carry humans to space again. All the while, this private commercial company fulfilled its resupply missions to the ISS, funding the human component too.

By early 2019, SpaceX began testing the Crew Dragon spacecraft, a variant of the Dragon 2 capsule. As opposed to the Cargo Dragon, the Crew Dragon capsule was designed to carry astronauts. This is the variant that would, today, carry both American astronauts into space. Technically, Endeavour is the fifth Crew Dragon, though the second to space. The first Crew Dragon to space made a similar mission to today’s landmark ISS docking, but without any crew aboard.

Paying Russia to Launch Americans

Since 2011, NASA has paid Russia to send American astronauts to the ISS.

How much does it cost to go to space? Between 2011 and 2020, it was $80 million per seat aboard Russian Soyuz capsules.

Through July of 2019, NASA spent $3.9 billion on transporting 70 American or partner astronauts to and from the ISS. That’s an average of $55.7 million across the 70 seats.

How much does it cost to go to space on Dragon with SpaceX? NASA estimates that the first six missions, including today’s, will cost $55 million per seat aboard the Crew Dragon. [1]

It’s very hard to know exactly what SpaceX has spent since its inception so that we might understand the cost to take our first two American astronauts to orbit since 2011. This is because SpaceX is a private company—we don’t have public data to analyze.

With that limitation in mind, let’s take a look at the total funding and earned contracts SpaceX has received.

How Much Does It Cost to Go to Space With SpaceX?

The closest we can get to understanding the total cost of sending astronauts Douglas Hurley and Robert Behnken to orbit in this mission is to total the known funding SpaceX has received for related work. This is from outside investment funding, personal funding from Musk, and delivered contracts from NASA.

There are some issues with this approach.

For one, SpaceX does much more than send astronauts to orbit.

The company also has contracts with the US Air Force, though some have not been completed, and others are more opaque.

SpaceX’s core business has been in sending humans and cargo to orbit or the ISS, so it makes sense to focus on outside funding to further that mission as well as known NASA contracts. While their recent delivery of a network of satellites designed to provide internet at a low cost caught a lot of attention, SpaceX’s primary revenue source is contracted deliveries to orbit and the ISS.

Let’s work through the funding to get an idea of how to answer: how much does it cost to go to space?

Elon Musk’s Personal Funding of SpaceX at its Inception

Most estimates put Elon Musk’s personal investment into founding SpaceX in 2002 at about $100 million. By 2008, SpaceX accepted $20 million in outside investment.

NASA was searching for private firms to be involved with human spaceflight in 2011. Funding awards were available to private companies that could help make that future a reality.

In the second round of commercial crew development funding awards, SpaceX earned $75 million to develop an integrated launch escape system for the Dragon capsule to improve human safety.

By 2012, estimates put Musk’s personal investment total at $100 million with another $100 million from outside investment. Estimates put the first decade of operational costs at about $1 billion. The difference, about $800 million, was from revenue on long-term launch and development contracts.

NASA’s Growth as a Source of Revenue for SpaceX

In August of 2012, SpaceX won an award worth $440 million from NASA. The award was intended to provide further funding for development and testing of the Dragon 2 spacecraft, with the Crew Dragon variant providing a method to take humans to the ISS once again.

By 2015, SpaceX raised additional outside funding in the amount of $1 billion. In 2017, another $350 million in outside funding was raised.

Later, SpaceX was awarded with another $2.6 billion worth of funding to certify the Dragon capsule for crewed flight by 2017.

Across 2019, SpaceX had multiple funding rounds with a total value of $1.33 billion. Early 2020 has already seen another $250 million in outside funding.

The Cost to Send SpaceX’s Dragon Capsule to Orbit with Two Astronauts

We can total Musk’s personal investment, outside funding, and NASA’s executed contracts to get an idea of how much money has gone into SpaceX over the last 18 years.

It’ll help us answer how much it costs to go to space in context of the entire SpaceX project from a scratch start to ISS docking.

This ignores some of the other, generally minor, funding sources SpaceX has received for more discrete work like USAF propulsion development. These are the funds that have been more focused on achieving the core mission of today’s flight, sending two American astronauts to the ISS.

To be clear: these funds have provided much more than to carry our first two astronauts on a private commercial vessel to the ISS.

They also represent the expenditures necessary to complete many resupply missions and progress towards future missions not yet completed. This is merely a snapshot in time of total funding SpaceX has received prior to a successful ISS docking mission with Dragon and crew.

DateAmount (USD, Millions)Source
2002100Elon Musk, Personal Funding
200820Outside Funding
201175NASA Award
201280Outside Funding
2012440NASA Award
20151000Outside Funding
2017350Outside Funding
20172600NASA Award
20191333Outside Funding
2020250Outside Funding
6,248Total Funding

SpaceX has most of the funds related to space logistics allotted to the company since its 2002 inception to reach today’s goal.

How much does it cost to go to space from scratch (and build an entire cargo network along the way)? $6.25 billion.

That may seem expensive if viewed as a bill to send these two astronauts, but remember that it’s the entire development and infrastructure it took to reach this point.

SpaceX will continue to provide crewed service and cargo service to the ISS, and much more, into the future.

The per-seat cost will amortize over time, drastically dropping with each successful mission.

NASA’s own estimates for the first six missions of Crew Dragon ring in at $55 million per seat.

This is the discrete cost NASA estimates for the Crew Dragon service. SpaceX has been able to obfuscate much of the development cost of Crew Dragon with its successful cargo missions as so much of the underlying systems are shared.

Space and Private Commercial Efficiency

I wrote an article a few years ago with a central theme of identifying the Apollo Program cost. That article identified the total cost, inflation-adjusted to 2020, at about $194 billion. While that crushes our $6.25 billion SpaceX mission cost for today, that was also a much loftier goal: humans on the moon. But, what about the first Apollo mission with a successful trip to orbit?

While Freedom 7 was the first American mission successfully to space with Alan Shephard onboard, Apollo 7 was the first Apollo mission to space. This mission was in 1968 and NASA began appropriating funds for the Apollo Program in 1960. Through 1968, NASA appropriated $14,105,420 for the Apollo missions.

How much did it cost to go to space in 1968 for the US? About $108 billion in costs for the first Apollo mission successfully in orbit with humans aboard, inflation-adjusted to 2020. [4]

SpaceX’s mission goes far beyond the ISS and orbit, eventually onto Mars. It’s not unlike NASA’s grandiose mission beyond Apollo 7.

Congressional testimony in 2017 discussed funding related topics for SpaceX and NASA. The estimate for the total development cost of Falcon 1 and Falcon 9 rockets was $390 million. This estimate was independently verified. Prior to this development, NASA estimated it’d cost $4 billion to develop a rocket system like the Falcon 9 using their traditional methods. That’s approximately ten times SpaceX’s audited cost.

Will SpaceX be our Spacefaring Future?

As technological improvements continue to drive down the price of our phones, tablets, and computers, it does the same for rocket launch systems. SpaceX’s major innovations in rocket recovery have allowed it to drastically cut transportation costs. If estimates turn out to be accurate, NASA should reduce their per-seat cost for sending astronauts to the ISS by nearly half versus paying for Russian Soyuz seats.

There’s one other wild thing I noticed while watching today’s launch to orbit aboard SpaceX’s Dragon Capsule. The two astronauts only had one direct action button they could press: an emergency scrub button.

SpaceX has made launching humans to orbit an automated, algorithmic process controlled by computers. Let’s hope this “autopilot” to space creates safer launches and in turn, more efficient ones.

Douglas Hurley and Robert Behnken opened up new doors for humans to explore the unknown, and they’ve done so by being as separated from the process as possible.

What was the cost to send two astronauts on a SpaceX rocket to orbit again?


  1. NASA’s Office of Inspector General, 2019 report:
  2. SpaceX, “Funding”:
    via Wikipedia
  3. Elon Musk’s Best Investments:
    via Investopedia
  4. NASA Budget Appropriations:
    via NASA History
  5. Imagery sourced from SpaceX
    SpaceX creative commons Flickr

How Much Did the Apollo Program Cost (and Was It Worth It)?

Today I’m going to analyze the Apollo Program budget. We’ll answer: how much did the Apollo Program cost? I’ll also review the return on that investment in space exploration.

Were the Moon Missions really a worthwhile endeavor?

Did sending a man to the moon accomplish anything more than create celebrity in the dark Cold War times?

Apollo Program Cost

The idea of returning to the moon has gained great interest in recent times. NASA indicated that it intends to re-explore our closest space neighbor.

America is working hard to lower the cost to return to space with SpaceX recently sending the first two astronauts to the ISS since 2011 aboard hardware made in the USA.

How Much Does It Cost to Go to Space? $6.25 Billion in 2020.

It seems that this has also created quite a bit of interest in our original moon exploration.

Let’s take a look at the hard numbers to see how the cost of going to the moon compares to the cost of other projects. Then I’ll tackle the subjective question of what gains can be attributed to going to the moon. 

But first up, how much did the Apollo Program cost?

The Apollo Program cost roughly $25.4 billion, unadjusted.

What’s the cost of Apollo Program in 2020 dollars? $194 billion.

That’s our total cost to go to the moon.

Consider, however, that this was for a project spanning from 1959 to beyond 1970 with six successful missions.

Eventually, Apollo 11 landed humans on the moon.

Consider that some 409,000 laborers were employed by the lunar program. These jobs were either directly through NASA, outside university research, or contracted workers.

Total US Federal Outlays vs. Apollo Program (1959-1972)

How does the total Apollo Program cost compare to the U.S. budget in the mission’s years?

US Federal Outlays vs. Apollo Program Cost

Let’s also look at the Apollo Program cost compared to other major government expenditures in U.S. history.

This data is adjusted for inflation to 2008 U.S. dollars.

Major US Government Expenditures vs. Apollo Program

NASA Apollo Program Budget

NASA’s official budget appropriations for the entire organization from 1960 to 1973, including work after the final Apollo mission, was $56.6 billion.

That means the Apollo Program budget represented 34% of NASA’s spending, $19.4 billion.

The total Apollo Program budget appropriations from NASA don’t quite match the calculated total Apollo Program cost already mentioned from official depositions ($25.4 billion). This is most likely because of other funding sources and cost overruns.

NASA Official Budget Appropriations, Apollo Program
NASA’s official Budget Appropriations during and for the Apollo Program, unadjusted, 1960-1973.

Adjusted for inflation to 2008, NASA’s entire budget for this period was about $363 billion.

Some of the work for Apollo began in 1959. The last Apollo mission flew in 1972. NASA provides data for 1960-1973 to represent Apollo as these were the years that had Budget Appropriations specific to Apollo.

The US annual federal outlays (the amount of money the country spends per year, which is typically more than our budget) from 1959 to 1972 totaled $1.9 trillion US dollars.  Converting these outlays from each of their years to an inflation-adjusted 2008 total brings the outlays to $11.9 trillion.

NASA represented roughly 2.2% of the total US federal outlays from 1959 to 1972. 

The Apollo Program in the same timeframe accounted for about 50% of NASA’s budget or just 1.1% of US total federal outlays during this timeframe.

Apollo Program vs Other Federal Projects

It is important to consider what the country has gained from the cost of the Apollo Program. 

I’m going to compare the gains of the Apollo Program against those of several large federal government projects or initiatives.

Let’s define some of the Apollo Program benefits first.

Apollo Program benefits

Apollo Program: Mission to the Moon

Aside from all of the historic achievements that made it into the history books through the Apollo Program, America had real, tangible gains from the investments made in the project.

For one, the Apollo program was a major stepping stone into future beyond Earth projects.

Much of the hardware developed during the Apollo era is in our first space station, Skylab. Skylab produced many valuable results based on its solar observatory and various experiments performed onboard, none of which would have been possible without the Apollo program.

Skylab is just one of many spacecraft that would not have been possible without the knowledge gained with the Apollo program.

The 1975 space docking with the Soviet Soyuz spacecraft was one of the major steps forward in rebuilding relations between the US and the USSR, eventually resulting in the end of the Cold War.

Benefits of the Apollo Program

The Apollo program created a variety of breakthroughs:

  • Early breast cancer detection
  • Integrated circuit development was sped up
  • Freeze-dried foods
  • Simplification of kidney dialysis
  • Insulation in an Alaskan pipeline
  • Spacesuit textiles in green building
  • And numerous more

The Apollo Program cost US taxpayers a significant amount of money but the benefits have been numerous.

The acceleration of research in fields that have benefited medicine, construction, and electronics pushed the country to lead the 20th century.

The cost to return to the moon

NASA estimated in 2005 that the cost to return to the Moon would be $104 billion over the course of 13 years.  These plans have recently come under great question. NASA has already invested some $7.7 billion in the project.

As of 2020, NASA’s goal is to return to the moon by 2024 via the Artemis program.

F-22 Raptor Project Cost & Benefit

The F-22 Raptor has been another source of much scrutiny at its expense.  The dominant, highly advanced Air Force backed fighter jet program had an estimated cost of $62 billion in 2006, $66.9 billion in 2008 US dollars.

That’s about half the cost of the Apollo program. 

As of this writing, the F-22 has never flown a combat mission (2020 edit: while still a questionable program fiscally, it’s flown many missions).

F-22 Raptor Program Cost

The F-22 program has provided the US with a spectacular dog-fighter, but we simply don’t currently live in an era that America has a direct competitor in this space. 

The fighter is so head and shoulders above the competition that it has no competition.

The US finds itself fighting against enemies where the F-22 simply does not make sense as a reasonable expenditure.

However, there is value in the US maintaining its technological lead in military hardware.  The US is so far ahead of other countries when it comes to conventional armies because of our constant investment. 

I can only hope the day comes that this is no longer a valid concern as the world unites to fight larger foes. Climate change, starvation, and over-population of our planet are just the beginning of the issues we face.

Interest on U.S. Debt Cost

The total interest paid on US federal budget debt was $140.3 billion during the Apollo Program timeframe ($870.56 billion 2008 US dollars).

This means that interest paid on debt accounted for 655% more outlays than the Apollo Program cost in the same period. 

For reference, the US paid $252.8 billion in 2008 in interest on the national debt—nearly twice the total cost of the entire Apollo program.

Taxpayers are funding horrendous amounts of interest on the debt of the current generation and its ancestors.

A single year of interest paid currently would pay for the entire original Apollo program.

It could cover the cost of a future Moon program and still have enough to produce most of the F-22 project.

While our country needs to get its debt wrangled, missing out on solid investments that pay dividends is foolhardy.

If we can pay out a few hundred billion dollars to reform health care and save the nation a few trillion dollars in the process—that’s an investment worth making (2020 note: consider the context this was written in 2008).

U.S. Interstate Highway System Cost & Benefit

The final cost for the Interstate Highway System to the Federal government started in 1956 by President Eisenhower was $114 billion by completion in 1991, about $500 billion in 2008 dollars.

That’s 376% the cost of the Apollo program.

Federal Interstate Highway System Cost

The Interstate Highway System has provided tens of thousands of government-sponsored jobs over the decades. It’s lead to much of the growth of the countries entire economic system.

Without this interstate highway system, how would our country have been able to move its goods to different regions for consumption and manufacturing?

The program is considered a necessity but another means of transportation was not weighed properly: railroads.

Prior to the Interstate Highway System, America revolved around the rails

Rails were much more widely used to transport goods and people around the country. Subsidies to the highway system eventually lead to the somewhat sorry state of our current rail system.

Look to Europe for an example of a system still capable of using a modicum of transportation techniques across a fairly large distance.  The highway system was vital to the culture and development of the US.

However, I believe that a slightly more balanced development of the highway system alongside the rail system could have lead to a strong, less car-dependent country.

Vietnam War Cost & Benefit

The cost of the Vietnam War from 1965-1975 was $111 billion or $686 billion in 2008 US dollars.

That’s 516% the cost of the Apollo program.

It’s a bit hard to describe the gains from the Vietnam War as we certainly lost many brave souls in the conflict.

The US was able to gain military experience which lead to a more thorough victory in Desert Storm.

During this period, the voting age was lowered to 18 from 21.

The military draft was eliminated.

An all-volunteer system was instated after the war.

U.S. Economic Stabilization (2008 Recession) Cost & Benefit

The Emergency Economic Stabilization Act of 2008 has authorized the Treasury Secretary to spend up to $700 billion taxpayer dollars. 

There is hope taxpayers will come out of this bailout program without too deep of a loss.

A portion of the expenditures should result in profits to offset the expected losses.  The true cost of the recent Federal bailouts of the financial sector are unknown.

If the program suffers a complete loss, it would represent 526% of the cost of the Apollo program.

The state of the economy was unclear for several years after the 2008-2009 Great Recession.

Would our nation have withstood the damage of the Great Recession without the Emergency Economic Stabilization Act of 2008?

The economic program cost taxpayers up to $700 billion.

It’s hard to say, we can’t rewind time, toss out the policy, and see what would have happened.

Economists generally agree that the Great Depression of the ’30s arose so strongly because of the hands-off approach of the governing body at the time.

With the country facing a dire recession, modern government has taken a much more hands-on approach. A variety of bailout-related acts were passed in an attempt to stabilize the country’s weakening economy.

Only time will tell how successful these programs have been.

Iraq and Afghanistan Wars Cost & Benefit

The war in Iraq and Afghanistan is estimated by the CBO to cost $2.4 trillion by 2017, $1.9 trillion attributed to Iraq.

Much of the cost of the war has been from deficit spending.

Iraq and Afghanistan War Costs

The Iraq and Afghanistan wars are still in progress (2020 note: STILL).

The entire notion of our country even entering these wars has thoroughly divided much of the US population, but I’ll attempt to stick to the facts.

The wars are estimated to cost the country some $2.4 trillion, nearly twenty times the Apollo Program cost.

The human cost in Iraq is estimated at over 100,000 lives, with over 30,000 being Americans.  

There have been thousands of more casualties in Afghanistan

Economically, we’ve gained greater access to natural resources in the region (oil). 

We’ve prevented the growth of radical anti-Americanism in some specific regions but many would argue that the whole ordeal has also created a negative attitude towards the US.

Was the Apollo Program worth it?

The jobs created, the technology gains, the intangible feeling of love for the country, American ideals, the future of generations, and hope for spreading humankind through the galaxies are just some of which was inspired by and created from the Apollo Program missions.

I find it difficult to argue against the comparatively low Apollo Program cost, especially when looking at other significant expenditures taken on by the U.S.

Why are we so worried about attempting to push the envelope further with more space exploration?

Any future Moon landing project is just a stepping-stone for Mars and beyond.

The US is working with private industry to create efficient ways to send astronauts to space and beyond.

How Much Does It Cost to Go to Space? $6.25 Billion in 2020.

Do you really believe humankind will survive on Earth into perpetuity?

Part Two, this analysis continues in:
Space Exploration Benefits and Its Future (NASA to SpaceX).

Apollo Program Cost FAQ

How much did the Apollo Program cost in today’s dollars?

The Apollo Program cost roughly $25.4 billion, unadjusted, in 1973. In 2020 dollars, that’s about $194 billion adjusted for inflation.

How much did Apollo 11 cost?

The total cost of the Apollo Program, including Apollo 11, was $25.4 billion, unadjusted.

How much did it cost to go to the moon in 1969?

NASA’s total budget appropriations for the Apollo Program through 1969 was $16.1 billion per official documents. The total cost of the Apollo Program up through about 1974 was $25.4 billion. Both amounts are unadjusted for inflation.

Types of Health Insurance Plans (Full Guide for Individuals)

Sadly, affordable individual health insurance has been a big roadblock to getting to the meat of operating a business as an entrepreneur lately. There are so many types of health insurance plans that it can be incredibly confusing to pick what’s best for yourself.

There’s a lot of options these days for individual health insurance plans.

At the highest level, there are generally two types of individual health insurance coverage, the PPO and the HMO. But in this guide, I’m going to work through the nitty-gritty of all the popular health insurance plans.

Types of Health Insurance Plans

There are several different types of health insurance plans and various levels of coverage.

The primary plans (HMO, PPO, POS) differ in how they require you to use the coverage or the costs which they cover.

Let’s review each of these types of health insurance plans and find the one which best fits your situation.

Health Maintenance Organization (HMO) Plan

The Health Maintenance Organization has existed since the ’70s in the US and is centered around a pre-selected network of doctors and medical services the plan participants can utilize while being covered by the HMO.

Generally, the patient has to have selected a Primary Care Physician (usually a general practitioner) who acts as a “gatekeeper” to other specialists and medical services. If, for example, the patient believed they needed to see an ear, nose, and throat specialist (an otolaryngologist) for a severe ear infection, the patient would first have to be examined and a referral given by the PCP to an otolaryngologist in the HMO’s network. Generally, coverage via an HMO is high (lower out-of-pocket costs) but strictly limited to the HMO network.

Preferred Provider Organization (PPO) Plan

The Preferred Provider Organization has become more popular in the past few decades as it offers greater flexibility to that of an HMO. The PPO designates a network that offers preferred (set, lower) rates for medical services to the PPO. This means that the doctors, specialists, hospitals, etc that exist in the network charge lower rates to the insured members of the PPO, and in exchange the network would receive the lion’s share of customers in the network.

n this, it functions quite similarly to an HMO – both offer networks of professionals that charge lower rates to members of the network, both charge a premium for access to the network rates for the member. However, PPOs do not have a PCP requirement nor do members need referrals to visit specialists.

Additionally, a PPO allows a patient to visit out-of-network medical services and still have coverage though at a significantly reduced level. This means that if you’re on vacation in Maui and pick-up a case of Shigellosis, your first call doesn’t absolutely have to be to your PCP for a referral (after all, you’re in Maui). You could visit a local doctor without worry though you may pay a bit more for the out-of-network service. Premiums are usually a bit higher for PPOs while care isn’t generally covered at quite as high of a level.

Point of Service (POS) Plan

The Point of Service option combines some of the advantages and disadvantages of both the HMO and the PPO. A POS is based on managed care (like an HMO), limiting service choices but lowering costs. An enrollee needs to utilize a PCP as a “gatekeeper” but the PCP may make recommendations for treatment outside the plan network, though with a lower coverage level. The patient may also have greater responsibility for form filings and general process management.

The Differences Between a PPO, HMO, and POS

So, a PPO offers flexibility at a bit higher cost while an HMO offers restricted, though often better coverage. A POS ends up combining the two, leveraging some advantages and disadvantages of both. It seems to me that most self-employed and entrepreneurs are going to wind up being traveling more often than their location- and employer-bound counterparts.

PPOs win in as being flexible and having a variety of choices. PPO individual health insurance plans for a healthy 27-year-old male in my region run from as low as $140/month to upwards of $400/month. If you qualify for ACA-related subsidies, the price can get below $100/month. There are dozens of plans to choose from with a variety of coverage levels. Let’s look at the most important ones.

Details of Health Insurance Plan Coverage


If you visit a GP or specialist because you’re feeling a bit ill, have a sudden rash, or any myriad of “I should probably go to the doctor” things, you’ll often end up with a copay for the visit you must pay out-of-pocket. Traditional PPOs have fairly low co-pays ($20-$40/visit) for doctors and specialists.

The co-pays do apply to your deductible generally which helps to reduce that amount. High-deductible plans (more on this later), often do not offer co-pays for routine services (though preventive services are still usually free) and you’ll need to fully cover the cost out-of-pocket.


When you’re looking at different types of health insurance plans, the deductible amount should be a serious consideration.

It’s the amount the patient must pay before the health insurance plan will pay for services rendered (often this is waived for preventative care — things like an annual check-up or physical, blood pressure screenings, cholesterol blood tests, etc).

For example, you break your arm in Ireland while mountain biking and the hospital charge is $3,000. Your deductible is $1,000. Out of your pocket comes $1,000 to cover the deductible, then the individual health insurance company’s coverage is applied to the remaining $2,000 (though that doesn’t necessarily mean you won’t be responsible for any of the $2,000 – see Coinsurance). A deductible resets yearly.


Coinsurance is the percentage the patient has to pay once the deductible is meant. In the example of a $3,000 hospital charge where the deductible was met at $1,000, if the patient has a coinsurance rate of 20%, they’ll need to cover an additional $400 while the insurance plan pays the remaining $1,600 — assuming this all falls under reasonable and expected services for the injury and is covered by the plan (but that’s a whole separate discussion).

Doing the math, you can see how out of the $3,000 bill, the insurance company only covered about 55% due to the deductible and coinsurance rate (this assumes the patient had no other medical expenses in the year that would have reduced the deductible and therein the total out-of-pocket cost for the broken arm). Fortunately if the patient decide to go skiing after their arm is all healed up and break a leg the same year, their deductible will be fully met and that $5,000 bill for the x-rays and cast will only require the 20% coinsurance on the patient’s part.

Out-of-pocket Maximum

An out-of-pocket maximum is a maximum amount the patient will be required to pay within a given year (resets annually). Often this is double the deductible (though the deductible is included). Given the above scenario of a broken arm and leg with a $2,000 out-of-pocket maximum, the patient paid $1,400 towards the broken arm services ($1,000 deductible and $400 coinsurance), so there’d be $600 left to meet the maximum.

The broken leg was another $1,000 in coinsurance at 20% of $5,000 but the out-of-pocket maximum of $2,000 would be reached with $600 more so the patient would only be responsible for $600 of the $5,000 for the broken leg. Additionally, any services within the same year will not require further payments from the patient now that both the deductible and out-of-pocket maximums were met.

What About The Affordable Care Act (ACA)/”Obamacare”?

The Affordable Care Act (ACA) altered many minimum requirements of healthcare coverage plans. It also pushes individuals to get coverage by way of a penalty if they do not have coverage (edit: no longer applicable).

The most interesting aspect is that it also creates a competitive marketplace for you to shop for individual health insurance.

While the marketplace may list certain “levels” associated with coverage plans (Bronze, Silver, Gold); they still represent an underlying type of plan. The levels just indicate a general sense of your liability and the cost of the plan. You still need to have a good grasp of the types of coverage, the risks/rewards of each, and how they’ll most benefit your lifestyle.

The marketplace for the ACA may vary from state-to-state as implementation, acceptance, or incorporation of the ACA evolves in each state. You will likely still be able to shop for plans without utilizing the healthcare marketplace in your state if you want to. As long as the plan meets the ACA requirements (and they generally should), you won’t be eligible for a penalty even if you buy the plan privately.

Overall, the ACA offers a wider breadth of choice shopping for individual health insurance plans while simultaneously mandating minimum coverage levels. Costs will rise for some enrollees and drop for others as certain mandates within the ACA affect maximum reimbursements or allowable costs.

Health Insurance Plan Coverage Aspects Summary

Now it’s important to consider there’s lots of nuance within the plan beyond these items so be sure to review them, additionally out-of-network coverage will have its own set of rules with higher deductibles, coinsurance, and so on. Fortunately the Affordable Care Act made lifetime maximums a non-issue where it used to be that the insurance company could stop paying once they met a certain dollar payment amount. Each plan will have specific entries for prescription, maternity, mental health coverages and more so be sure to review how the plan relates to specific services.

In review, the deductible is the amount you have to pay before your coverage kicks in, the coinsurance is how much you have to pay for coverage once the deductible is met, and the out-of-pocket max is the total amount you’re responsible for within a given year. That means you can quickly figure out how much your maximum cost-per-year is for medical coverage if the proverbial crap hits the fan. If your monthly premium is $200 and your in-network out-of-pocket maximum is $4,000, that’s a total potential cost of $6,400/year assuming you stay within the network and follow the rules. This means you better make sure your emergency fund is at least $4,000.

Affordable individual health insurance ideas

Picking An Affordable Health Insurance Plan

If you’re a healthy individual and read between the lines here, it might seem like you could be paying $200/month just so your annual physical is only $30 instead of $150 if you’d just paid it yourself. Hell, even if you did have a minor health problem during the year that ran $500 in doctor visits and prescriptions, none of that would be covered until you met your deductible. So why buy any particular one of the types of health insurance plans?

The obvious answer is of course that it’s for emergencies and the big expenses. When you have a major health issue that cost tens of thousands of dollars to treat the monthly fee for insurance and out-of-pocket maximum will pale in comparison and you’ll be happy to have the insurance. If you’re young and healthy, it’s simply a gamble to go on without it. What doesn’t make sense at all though is to have a high monthly premium in order to get low copays for the few times per year you might visit the doctor for routine aches and pains. You could pay a higher monthly premium for a lower deductible (and lower out-of-pocket maximum) or lower coinsurance as well and that could be a wise investment.

So how do you balance the cost of a monthly premium against the optional levels of coverage in a way that makes sense? You probably don’t want to pay through the teeth just to have low copays or a low deductible and rarely have a need to use it. You also probably don’t want to pay $52/month and have to shell out $15,000 when a real emergency happens, all the while having crap coverage for routine service (yes, that’s a real plan option for me at least).

Let me introduce you to the solution:

High Deductible Health Plan (HDHP) with Health Savings Account (HSA) Eligibility

Why would you want a plan that has a high deductible? Most HDHPs come with good coverage for preventative care but require you to pay for absolutely everything else out-of-pocket up to your deductible.

Catastrophic Health Insurance

For 2015, a “high deductible” health plan qualifies if its deductible is at least $1,300 for an individual or $2,600 for a familyAdditionally, an HDHP sets a limit to the maximum out-of-pocket expenses – currently $6,600 for an individual or $13,200 for a family. Often, High Deductible Health Plans are referred to as catastrophic individual health insurance since they really only kick-in for very expensive procedures or many procedure occurrences within an coverage period.

Affordable Medical Insurance

HDHPs usually are quite a bit cheaper than a similar traditional co-pay oriented PPO as the mindset is that the patient has some skin in the game for every visit so the premium should be less expensive. This means that the HDHP offers a high level of flexibility of choice of doctor/specialist and a high level of responsibility for costs.

The monthly premium of an HDHP can easily be 50% less than that of an otherwise equivalent traditional co-pay PPO. Makes sense, but wouldn’t you lose the savings getting nickeled and aimed for every little thing? Not necessarily.

First, an HDHP will cover everything once you’ve met your deductible (minus your coinsurance, and even that is only up to the out-of-pocket max). Second, a wide range of preventative care is fully covered by most HDHPs (no copays even required) which is probably what you’ll use most often. Third, and most important for a long-term looking work-independent individual like yourself, is the Health Savings Account or HSA.

Health Savings Account Rules

A Health Savings Account allows you to make contributions to a bank account for medical expenses that has tax advantages as long as you follow the rules. You might be familiar with an FSA or Flexible Savings Account — they’re very similar but an HSA allows you to roll the balance over each year and earn interest on the balance or even invest it.

Whereas with an FSA your employer owns the account, you own an HSA. It travels with you year-to-year and is only tied to the bank you opened the account with. Now, just like an FSA, an HSA only allows you to spend your balance on certain medically related services and products.

There are also contribution limits ($3,350 individual, $6,550 family for 2015) just like an FSA.

The real kicker to all of these bonuses though is that the account is tax-deductible “above the line” which means that it reduces your total taxable income for the year. This health savings account deduction will likely reward you with a large refund come tax time.

When you’re considering the various types of health insurance plans, HSA eligibility might be an important factor for you.

Let’s look at a real-world scenario and see just how the numbers work.

Saving Money with a Health Savings Account

Pulling it Together: HDHP as PPO with an HSA

Let’s say Johnny who’s a freelance copyrighter fractures his left radial head (that’s your elbow!) while horseback riding in Colorado, just a few hours from home.

He’s rushed off to the emergency room and ends up needing surgery, a cast, and repeated visits for rehabilitation over the next few months. Johnny has individual health insurance qualifying as an HDHP with a $3,000 deductible and 0% coinsurance.

The out-of-pocket max is also $3,000 (the 0% coinsurance essentially means Johnny wouldn’t pay anything beyond the deductible anyway so the individual health insurance company ends up matching the deductible and out-of-pocket max).

Johnny has been contributing to his HSA for the past year and a half with a goal to meet his deductible annually, which means his contribution was $250/month ($3,000/12 months), just under the max contribution to his HSA per year.

The only other medical expenses he had in the last year was when his doctor, during a covered physical, prescribed a generic version of Nexium for frequent heartburn he was having which he’s been paying for monthly via his HSA.

At $40/month, 6 months into the year, with a total HSA investment of  $4,500 ($250/month for 18 months), he’s spent $240 on the heartburn medication leaving him with $4,260 in his HSA and $2,760 remaining for the deductible.

The cost of his fractured elbow and recovery ended up being in excess of $10,000. Johnny’s HDHP pays everything beyond the remaining $2,760 deductible which he covers with his HSA, leaving him with $1,500 in his HSA for future expenses and 100% coverage by the HDHP for the rest of the year for any further medical expenses.

Johnny’s HDHP cost him $120/month, his $3,000 contribution to the HSA reduced his taxes by $1,000 (almost completely paying for the monthly premium) and his HSA will be earning interest and investment returns for the next few decades until he retires at 65 and can draw on his HSA for regular living expenses just like a traditional IRA.

The flexibility of a PPO, the cost-control of an HDHP, and the tax advantages plus investment options of an HSA form to a fairly compelling, though not simple, individual health insurance option.

For the long-term thinking self-employed person or entrepreneur, it can provide a great shield from excessive emergency health expenses, low monthly costs, flexible investment options, tax advantages, and options in healthcare service.

This is my favorite way to use the various types of health insurance plans.

Even if you’re a cubicle worker and your deductible is over $1,200 per year, there’s a chance your employer-sponsored plan is HSA eligible — it might be time to give human resources a call!