MONEY IN HEALTHCARE
Understanding your health includes understanding the cost of healthcare. Health insurance is a contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium. Getting more comfortable with these terms could save you headache and dollars.
WHY IS THIS IMPORTANT
Insurance plans can differ in which providers you can see and how much you have to pay even after paying the premium (see below for this definition and others). It’s important to understand your costs and key health insurance terms, so you’ll know what services your plan will pay for and how much each visit or medicine will cost. (Healthcare.gov) Nearly 20% of bankruptcies in the U.S. are directly related to unmanageable health care costs by families. Having access to care improves how well you use available care, improves health outcomes, and improves your sense of well-being and success.
COINSURANCE VS COPAY(MENT)
Coinsurance | Copay(ment) |
|---|---|
A percentage of the cost of care. | A set dollar amount |
Amount varies depending on cost of service | Preset amount |
Not applicable until deductible completely paid | Can be charged before deductible met |
Same percentage regardless of procedure or cost | May be different depending on procedure or in- or out-of-network care location |
A SCENARIO TO ILLUSTRATE
Example Plan:
-$10 copay for standard preventative services
-$2800 Yearly deductible
-20% coinsurance
You go see your in-network doctor for an annual visit and have to pay a $10 copay for regular visits when you arrive at your doctor’s office.
Your doctors says it’s time to get a colonoscopy which is covered without additional cost to you. The GI doctor ( doctor who specializes in caring for and diagnosing issues of the digestive system (e.g. stomach, bowel, liver, etc.) who does the colonoscopy says they need to do an additional procedure because there is something in your family history that is concerning.
This additional procedure is not covered by your insurance as part of standard preventative care. You will then be responsible for the whole cost if you haven't paid up your deductible (i.e. $2800 yearly deductible). If you have met your deductible, your insurance will cover 80% of the additional cost and you are responsible for what’s left, coinsurance. Ex. additional procedure costs $1000, the GI doctor’s billing office
will send you a bill for $200 because your insurance carrier paid their part, $800.
WHAT ABOUT HSA and FSAs?
Think of these as little piggy banks you set up each year to hold a few dollars specifically for (qualified) medical expenses. The money is taken from your paycheck pre-tax, so your taxable income is reduced (YAY!!). The difference in the two accounts are:
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Who “owns” the account (you vs your employer)
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Health plan requirement of your eligibility
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What happens to the left over funds are the end of the year
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Whether all the money is available up front or has to accrue as you put money in throughout the year
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Can the money be rolled over to the next year if you didn’t use it all
ADDITIONAL READING & RESOURCES
VIDEO
THINGS YOU SHOULD KNOW
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Premium - what you pay each month to keep your insurance policy active
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Deductible - before your insurance carrier will pay for services, each year you must pay at least this much before the insurance carrier will pay. This usually does not include preventative care (e.g. yearly office visits, shots, etc.)
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See Healthcare Marketplace at https://www.healthcare.gov/preventive-care-adults/ to see what insurance providers are required to cover without additional cost to you (no deductible)
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You will possibly have to cost share or help with payment, even if you have insurance, on some services. This comes in three forms:
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Copay(copayment)
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Coinsurance
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Deductible
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QUESTIONS TO CONSIDER WHEN CHOOSING YOUR PLAN
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Will I be able to see my current doctor?
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What care is included without out-of-pocket costs?
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What other benefits are included (i.e. vision coverage, dental, mental health, etc.?)
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Can I handle the copays, deductible, premium payment, and coinsurance required?
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Is it a PPO, HMO, or fee-for-service plan? See https://youtu.be/lvRetvxWjQY for a video description of each.
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How is prescription coverage managed?