Another reason to put aside emergency savings: health insurance co-pays and deductibles

You know what your household spends each month for your health insurance premium. And you likely know how much you need to kick in — your annual deductible — to cover medical bills before insurance starts actually covering things.

But what about your maximum annual out-of-pocket expense (OOP) if you run into a serious illness or injury that requires expensive treatment?

The OOP tends to be a bit out of sight, out of mind because it only comes into play when there is a serious injury or illness.

But given the high cost of OOPs, they are a potential cost that should be part of your overall financial plan.

Your premium is the cost to have insurance. Your OOP is the maximum cost to use that insurance in a calendar year. Your OOP includes your deductible and any additional co-pays and coinsurance once you've met the deductible requirement.

According to the Kaiser Family Foundation (KFF), a nonpartisan health care research organization, the average annual deductible last year for single coverage ranged from around $1,200 to $2,300, depending on the type of plan. For family coverage, the deductible ranged from $2,700 to $4,550.

That's already a steep demand on household cash flow if someone needs ongoing care or a battery of expensive tests, let alone hospitalization. But your premium and the deductible is not all that you might owe in a given year.

Then there's the coinsurance to contend with. If you need tests or treatment, coinsurance is the percentage of the bill you are required to pay. The average coinsurance rate last year for employer-provided plans was nearly 20%. On a $2,500 MRI cost, that means you'd be expected to cough up $500. For that one test.

The somewhat silver lining is that your workplace plan puts a lid on the total costs you can be hit with in a given year: the maximum out-of-pocket.

According to KFF, the average annual maximum out-of-pocket for a single person with workplace coverage in 2020 was $4,000. That's a lot more than the typical deductible for single coverage. And nearly 1 in 5 single insureds had an OOP of at least $6,000. Out-of-pocket costs for family coverage are typically higher; some plans set the costs for the entire family, others impose a separate OOP for each family member.

The out-of-pocket limit only applies if you stay in-network. There typically is no limit if you seek care outside your plan's approved list of doctors and facilities.

Moreover, if your illness or injury isn't resolved by Dec. 31, the new year will bring a reset, and you will owe the deductible and be held to a fresh OOP limit for the new year.

Clearly, OOP costs are an even more important reason to build up your emergency fund. Before you talk yourself out of finding a way to save a little bit more, consider these straightforward steps to building a bigger emergency fund.