When you become a full-time employee of a company that has more than 50 employees, by law, your employer must offer you health insurance. But healthcare can be confusing, especially if you’ve been on someone else’s plan (like a parent’s or a spouse’s) for a long time. There are a lot of things to consider when looking at healthcare plans, so let’s get into it.
Plan Structure
Depending on your employer and the insurance they offer, there are different plans that they have for you to choose from. But in general, there are two types of insurance plans, buy-up plans and HSA plans. Buy-up plans are your standard insurance plans: money is deducted from your paycheck to go towards a monthly fee. These plans usually rely on fees that you pay out of pocket to your doctors and offer coverage for a variety of services. HSAs on the other hand offer something called a Health Savings Account (HSA), where you can choose the amount of money deducted from your paychecks. This money is then put into the account for you to use to pay medical bills or other expenses as they arise. This money follows you from plan to plan, and you can always withdraw from it, but can only deposit if you have an HSA insurance plan. There are other types of insurance, so do more research if your employer offers something different.
Copayments vs. Coinsurance
Depending on the plan or the medical service, you can either pay a copayment or a coinsurance. Copayments, often referred to as copays, are fees that the insurance company bills you every time to receive medical care. These can include doctor’s visits, medications, emergency room visits, etc. Sometimes the copayment is uniform throughout all the services the insurance offers, but most often different care has different rates. For example, it’s usually more expensive to see a specialist than it is to see a general practitioner. Or depending on how specialized a medication is, you could pay more or less money for each refill. It all depends on the individual plan.
Coinsurance on the other hand is when your insurance company splits the cost of medical care with you. For example, if you have a 25% coinsurance for x-ray services, your insurance pays 75% of the cost and you cover the remaining 25%. Some plans are built entirely around coinsurances, but it’s common to see both coinsurances and copayments present in the same plans. Again, it all depends on the insurance provider, the plans offered to you, and your employer’s group.
Deductibles and Out-of-Pocket Maximums
A deductible is the amount of money you need to spend to receive benefits. Sometimes this means you need to reach the deductible to receive benefits. Other times, you can receive some benefits before hitting the deductible, but not others. These benefits are labeled “not subject to deductible,” or some variation of that. For instance, sometimes you can receive copays without hitting the deductible, but you must pay insurance rates for the services covered by coinsurance until the deductible is met, or it could be the other way around, depending on the individual plan.
Out-of-pocket maximums is the largest amount you will pay while under that insurance plan. It’s a number greater than your deductible, and once you pay the maximum, the insurance covers all your care until the next coverage period. This is usually the next year, but on rare occasions your insurance might change (insurer, employment status, marriage, a new child, etc.) and you may have to start all over again, including with the deductible. So, if you know something’s coming, you might need to get a little strategic with the healthcare services you receive.
Pricing
Usually speaking, the higher the deductible and the out-of-pocket maximum, the more inexpensive the insurance. High deductible insurance tends to take out a small amount of money from your paycheck (if you’re in a buy-up plan). However, cheaper monthly costs and high deductibles are usually coupled with poorer benefits. Insurance plans that charge more monthly tend to have better coverage, cheaper copays, and lower coinsurances. Whether you decide to pay less monthly for less coverage or more for more coverage is up to you and your medical situation. Depending on your individual needs, you might spend more money on a plan than you really need.
Who do I Ask if I Have Questions?
When your employer’s Open Enrollment begins, you will be given a packet of information with all the relevant insurance information you can study. But if you still have questions, you can reach out to your benefits department and bring them the questions you’ve prepared. If your company has a broker, they might get in touch with them and schedule a meeting between the two of you to work out any issues.
Health insurance is hard. It’s complicated and confusing, and that’s made more frustrating because of its necessity. But if you take your time, ask questions, and understand your and your household’s needs, you can work through the process and find a plan that is right for you.
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