We all feel the weight of inflation these days.
Our economy and the price of gas have made many of us take a closer look at our finances and how we spend our money, and how we can save money.
Find a few things on your credit card statements that you can live without and cut back on the costs.
What else should you think about?
It might be a good time to look over your health insurance.
Surprised?
When you think about insurance, you might not think you want to talk about it, but it is essential. And it can be pricey. The right health plan is necessary for you.
Most people think insurance is hard to understand, and they often end up with the wrong coverage.
If you want to find ways to save money and learn more about insurance, keep reading!
I’ll go over some general terms and a few different health insurance plans then. Because of this, you will have a better idea of how health insurance works, and you won’t have to feel bad about it!
Term Definitions
Premium
A premium is what an insurance company charges to cover the costs of a plan. Similar to how you pay a cell phone company each month for phone and data service. You pay the premium each month if you want to be covered by insurance. This is a set amount that you pay each month to be covered.
Deductible
You must pay a set dollar amount before your insurance company starts to pay some of the costs for some of the things you need.
People often have to pay for hospital stays, imaging, and diagnostic tests through their insurance plans. On January 1 of each year, most deductibles start over again.
If you paid for AppleCare and had to pay for a new phone screen because it was broken, you’re probably familiar with a deductible, which is how you pay for the service. Before they could fix your screen, the Genius took $29 from you at the store. The deductible is $29, which you have to pay. First, you have to pay for it yourself. But if you didn’t have insurance, it would have cost you a lot more money. In the end, it would have cost a few hundred dollars. Insurance is a good thing because I wouldn’t be able to pay
Coinsurance
After you meet your deductible, coinsurance is how much you will have to pay for medical care. The term “cost-share” is also used. In many health insurance plans, the member will be responsible for 20% of the charges, but the insurance plan will pay for most of the rest.
Before the end of the year, you have to have an outpatient procedure that costs $1,000. You will pay $200 (20% of $1,000) for the procedure, and the insurance plan will spend the rest of the bill (80% of $1,000).
Copayment/Copay
Some plans may charge you a fee or co-pay for some services. A co-pay is a single amount that must be paid at the time of service. This is called a co-payment. Most people who go to the doctor or get a prescription pay a fee.
When you go to the doctor, you have to pay $30. This is an example of how your plan works. If you have a health insurance plan, your doctor will take $30 from you when you come in for your appointment. The plan will pay the rest of the bill.
Out-of-Pocket Maximum (OOPM)
Out-of-Pocket Maximum is a term for how much money you can spend each year. This is the maximum amount you will have to pay for all of your services in the policy year. This is the worst-case scenario. The deductibles, co-pays, and coinsurance you pay for services go toward the OOPM, which is how much you spend.
As soon as you meet your OOPM, the plan will pay 100% of your medical and pharmacy costs for the rest of the year. In the same way that deductibles usually change on January 1, the OOPM usually changes.
Now that you know what insurance terms mean, let’s show you a few health insurance plans.
Types of Medical Insurance
Health Maintenance Organization (HMO)
With most HMO plans, you get a lot of benefits. If you have an HMO plan, you may not even have to pay a deductible. Most services will have set co-pay amounts. HMO plans are usually cheaper than other types of plans.
It’s a low-cost plan with a lot of great benefits. Is it too good to be true? There has to be a catch, right, right? There are some things to keep in mind about HMO plans, though.
Availability/Network
HMOs usually have a smaller group of doctors who live in the same area.
Primary Care Physician (PCP)
You will need to pick a Primary Care Physician (PCP) who will be in charge of your health care. Your doctor will be your coach or gatekeeper and help you with your medical care. If you need specialized care, you will need to rely on them to find another doctor in the network.
Referrals
You will need to get referrals from your PCP for any services that aren’t part of their care. Unless your PCP gives you the go-ahead, you can’t see another doctor.
Out-of-Network Benefits
There are no benefits for people who don’t work for the company. You will have to pay the whole bill to get care from someone who isn’t part of the HMO network. Only in an actual emergency can you break this rule. The plan will cover emergency services at a provider outside of the plan’s network.
Even though HMO plans have some rules, they still provide excellent coverage for their members. If your doctor is a part of the plan, it might be a good idea for you.
Preferred Provider Organization (PPO)
There are a lot of PPOs in the world of health insurance. They give you more options and don’t have as many rules as HMO plans.
Most insurance plans have a lot of providers in their network. Even if you get care from a provider who isn’t in the network, the insurance company will pay some of the cost. This is because most insurance plans have a lot of providers. Even though they offer out-of-network benefits, seeing providers in your network is more cost-effective.
PPO plans don’t require you to pick a Primary Care Physician, and most of them don’t require referrals for any services at all.
A lot of PPO plans have deductibles, co-pays, and coinsurance. If you go to the doctor or get a prescription, you’ll have to pay a small fee (like $35 or $50). You might also have to pay $1,500 for a stay in the hospital.
Many people choose PPO plans because they are simple and easy to use. Because of this, you may have to pay more money for your insurance plan.
People think about it when they go to the grocery store. A whole green pepper will cost you less, but you can also choose to get a pre-chopped and ready-to-eat green pepper from the store. But it’s going to be more expensive because it’s easier to get. The same thing happens with health insurance!
High Deductible Health Plan (HDHP)
An HDHP is a type of PPO plan. So all of the general information about PPOs is true. Some of these insurance plans have a lot of providers in their network, and they also cover services that aren’t in the network. Members don’t need to pick a doctor or get a referral for these services.
There are two types of health insurance: PPO and HDHP. An HDHP is different from PPO because it doesn’t cover everything. It’s not all the same:
- They have higher deductibles, so their monthly premiums are lower.
- They don’t have to pay any co-pays. All services, including prescription refills, will be subject to the deductible. You will have to pay for all medical services and perceptions out of pocket until you reach the plan’s deductible.
- HDHPs can be combined with a Health Savings Account (HSA) (HSA).
Number three on the list above is significant. The best thing about an HDHP plan is that it lets you open a Health Savings Account (HSA).
In the case of HSAs, there is a lot to unpack. They deserve their piece of writing.
It’s not over yet: Because of this, HSAs have a three-way tax break: Contributions you make to the account lower your taxable income, interest, and investment gains aren’t taxed, and withdrawals for qualified medical expenses are tax-free if they’re used to pay for qualified medical expenses. Having an HSA is the best way to get tax breaks!
In this case, an HDHP plan might be the best choice for you. Keep paying into your HSA account every month to build a safety net. You can do this without paying any taxes. If you have an unexpected medical bill down the road, you’ll be able to use the money you’ve saved up.
Conclusion and The Question Are, What Is the Best Plan?
How it turns out depends on what you want to do. It’s not the same for each person regarding both their health and money. You’re going to have to think about which plan is best for you and then decide.
Each insurance company has a member portal where you can get information about claims. In the past two or three years, look at your claims and see how much you used the insurance and paid in premiums.
The insurance may have been used a lot, with many trips to the doctor and prescriptions filled. People may find out they haven’t been to the doctor.
Based on how much you use the plan, does your current coverage make sense for you right now?
You might pay a lot of money for insurance that you don’t need. Consider a more logical plan. Why pay more for a plan you rarely use?
If you are going to the hospital soon, you might think it would be hard to pay the deductible. Spending a little more each month for a plan with a lower deductible may be worth it in this case because it will save you money in the long run.
What kind of risk can you take? This is also important.
The good news is that there aren’t any long-term commitments regarding health insurance. A policy is only in place for a year. It’s easy to change a plan if you try it out and don’t like it. Remove this rule and try out a new one in the future! The lesson was learned.
There are many things to think about when it comes to getting health insurance. There are both good and bad things about each plan. There is a lot of important information here that I hope will help you make a good choice about your insurance in the future.