Should you choose a high-deductible or low-deductible plan? What about an HSA or FSA? An HMO or a PPO? Traditional Medicare, Medigap, or Medicare Advantage? And what does all of it even mean?When it comes time to choose a plan for you and your family, we’ve put together this guide to help you better understand the process so you make informed decisions for you and your family.
If you just need a general primer on health insurance terms like deductible, copay, premiums, coinsurance and more, don’t worry — we’ve got you covered for that too.
Basic Health Insurance Terms
Premium: This is the amount you pay every month for health insurance coverage, regardless of whether or not you use it.
Deductible: This is how much money you pay out of your own pocket for most medical services, except for free preventative care, before your insurance kicks in to cover the costs. Once you meet your deductible, then the insurance company starts paying a larger portion of charges.For example, if your plan has a $1,000 deductible, your insurance company won’t pay any of your bills until you’ve spent this amount. However, there are some preventative services that your insurance will cover even before you reach your deductible. You can see a .
Out-of-pocket limit: This is the maximum amount you’ll have to spend for medical care in a year, not including your monthly premiums and as long as you stay within your insurance coverage network. After you meet this limit, the insurance company must pay for 100% of in-network services that are covered by your policy.
High-deductible plan vs. low-deductible plan: There are a few things to consider when deciding whether to go with a high deductible plan or a low deductible plan.
High-deductible health plans (HDHP) typically have lower monthly premiums than low-deductible plans, but many of them have deductibles that are close to the out-of-pocket limit, which can be $5,000 or more (those are usually the plans with the lowest premiums). Low-deductible plans typically come with higher monthly premiums, but of course, the deductible is lower.
Another difference is access to an HSA. 耀竣金融配资_在线配资炒股:Here’s more on how HSAs work.Although HDHPs come with higher out-of-pocket costs, they can still save you money, depending on your situation.
Here’s when a high-deductible plan might be right for you:
- You’re healthy, rarely get sick and don’t need to go to the doctor very often.
- If necessary, you could afford to pay your deductible upfront, or pay the bill within 30 days, if an unexpected medical expense came up and you had to get care.
- You can use an HSA as a way to save or invest money and can make contributions each month. (Learn more about HSAs and how they work.)
Here’s when a low-deductible plan might be right for you:
- You have a chronic or ongoing condition that needs frequent treatment.
- You need to see a doctor frequently.
- You’re pregnant, planning to get pregnant or have small kids.
- You’re thinking about having, or anticipate you may need, major surgery.
- You take several prescription medications (or a few, or even one, expensive medication).
- You (or your kids) participate in sports (especially contact sports or any that involve a high risk of injury).
HMO vs. PPO: What’s the Difference?
First, let’s define the acronyms: HMO stands for health maintenance organization and PPO stands for preferred provider organization.
With an HMO, you get access to doctors and hospitals within a network defined by the insurance company.
With a PPO, there’s more leniency when it comes to seeing out-of-network health care providers without a referral. But the drawback is that PPOs tend to be pricier than HMOs.
HSAs: What Are They and Are They Right for You?More and more of us are in a position where employers will offer high-deductible plans, often called HSA-eligible plans in whatever plan documentation your employer has. HSAs have historically been popular with small business owners. But now larger employers have begun offering HSAs as an option for people at all income levels. You as an employee may be tempted to take one because maybe the portion you pay is lower than with other traditional health plans. So if you’re going to pick an HSA for that reason, you need to understand how the game is played.
耀竣金融配资_在线配资炒股:Read more about HSAs.
FSAs: The ‘Use It or Lose It’ Rule Has Softened
With an FSA, you can 耀竣金融配资_在线配资炒股:put aside up to $2,550 a year from your paycheck that can be used for . And here’s a bonus: The money that’s deducted from your paycheck is never taxed.Many people are scared off by the old rules that governed FSAs. It used to be that you had to use the money you put aside in a calendar year or you would lose it. But now employers are allowed to let you carry $500 forward year to year. Now that most of us have pretty significant deductibles, FSAs make more sense than ever.
Medicare: Understanding the Alphabet Soup
With Parts A, B, C and D, Medicare can be difficult to understand. But don’t fret, we’ve got a primer for you here.
In a nutshell, Part A and Part B cover your main health care costs, such as hospital and outpatient care. It’s government-provided insurance coverage.
Medicare Part D, which offers prescription drug coverage, is provided by private insurance carriers.
Medicare Advantage: What Does It Cover?Part C, meanwhile, is also known as Medicare Advantage. This is a program that combines Parts A and B, adds additional benefits (i.e. vision or dental), and typically includes prescription drug coverage (Part D). Keep in mind that while using Medicare Advantage Part C, Part A and B do not go away and you are still responsible for those premiums.
Again, for a better understanding of what Medicare and its alphabet soup on letters cover, 耀竣金融配资_在线配资炒股:see this article.