While it may seem mind-numbingly boring, health insurance is a modern necessity. And having a solid understanding of your basic options can ultimately save you loads of time, money, and heartache (or any ache).
Essentially the purpose of health insurance is to help offset the potentially high cost of medical care. Many people get insurance through their employer, but it can also be purchased at HealthCare.gov. Before we dive into the major plan options, here are a few key terms you'll need to know:
This is the amount you’ll pay for health insurance (typically every month), regardless of whether you see a doctor or not. In 2015, the average monthly premium (sans employer contribution) was $256. Premiums can range from $0 to upwards of $500, depending on what you elect and what your employer contributes.
This is the amount you pay for services until your health insurance takes over. As of 2015, the government defined a high-deductible health plan (HDHP) as anything more than $1,300.
This term refers to providers who have a contract with your insurance company.
Providers who do not have a contract with your insurance company (more on why this matters later).
Your employer will likely present you with a few plan options at varying price points, and you'll pick the one that best meets your needs. The four most common types are PPO, EPO, POS, and HMO. WTF do these acronyms actually mean? Let's break them down:
Some people like to have it both ways. So do PPOs. These plans allow you to go in- or out-of-network. While your savings will always be greatest in-network, you'll still receive some coverage (so you're not paying the full cost out of pocket) if you pick an out-of-network doctor.
A few things you should know:
"Exclusive" is the keyword here. It means you receive benefits exclusively from in-network providers only. Go out-of-network and pay 100 percent of the cost out-of-pocket. Other helpful details:
With an HMO, you'll need to designate a primary care provider (PCP) and run everything through that person before you see a specialist. (Heads up, ladies: Your OBGYN can qualify as your PCP under most plans). Other things to consider:
Mix a little of this, a little of that, and what do you get? A POS plan! More specifically...
Preventative care, plain and simple. If you’re a healthy 21-year-old, you might be utilizing services like annual screenings, vaccines, physicals, and wellness visits. And those are all covered 100 percent under any plan—even the ones with cheap premiums.
Just be mindful that most plans won’t cover vision, dental, orthopedics, some alternative medicines, infertility treatments, or anything cosmetic.
For cash-strapped millennials, a PPO often seems like the best option (gotta love those low deductibles). But one thing a healthy single person shouldn’t rule out is a plan with a high deductible and low monthly premium. Despite the sticker shock of a $1,000+ deductible, if you only see a doc twice a year, that number won't really affect you. And you’ll save on that monthly premium, so you can put your money toward other expenses.
If you’re a freelancer or your employer does not provide health insurance, you’ll can purchase it for yourself at HealthCare.gov. There are four different tiers—Bronze, Silver, Gold, and Platinum—and as you probably guessed, they increase by level of coverage and monthly cost. The fifth tier, Catastrophic coverage, is only available to those under age 30 or who meet special hardship exemptions.
Everyone is responsible for copays, fixed amounts you'll pay for covered health care services (usually at the time of service). This includes things like doctor visits, prescription drugs, and X-rays.
If that seems like a lot of money, don't worry. You might be able to stop paying for certain services eventually.
Plans come with a maximum out-of-pocket cost—the highest amount you’ll be expected to pay during a policy period (usually one year). After you reach that maximum, through deductibles, copays, and coinsurance, your insurance company will pay for 100 percent of your medical care. For individuals shopping at HealthCare.gov in 2015, that maximum amount was $6,600.
You may have the option of opening a special health expense account. Not sure you want to bother keeping track of yet another account? Then don't! But consider that these bad boys are tax-exempt, and you can generally use them to cover some health-related expenses—from copays and contact lenses to your plan deductible and prescription drugs. Here are the three main types.