Intro

Fill you in on that healthcare lingo, what is the deductible anyways? And then, try to help you walk away knowing which plan might be best for you? Now, I’m not saying this will be the most exciting topic, but I am going to give you some crucial information to use. When thinking about your overall financial situation, health care can have a massive impact on this. I mean, for many of us, medical emergencies might be the most expensive purchase you make in any given year.

No.1

So if you want your finances to stay on track, don’t let a medical emergency derail you. Keep watching this video. Okay, so first off, what is open enrollment? This is the time when you have to decide which health care plan you’re going to choose for the following calendar year. And it’s typically November first through January 15. And once you choose that plan, you’re pretty set for the next year unless there’s some major event, like a new job or child. It’s really important you do a bit of extra research right now to choose something that you might be stuck with for a full year. Okay, but what are the different plans out there? The main options are HMO, Health Maintenance Organization, PPO, Preferred Provider Organization, and HDHP, High Deductible Health Plan.

No.2

There are other types of plans available, especially for those using non-employer group plans, but today we’ll just cover these. But before we get in the details, we got to cover some of this basic healthcare lingo. First off, what is a premium? This is what you’ll pay each year just to have insurance. Usually, this will come out of your paycheck, and employers typically cover some portion of this expense, like around 70 to 80%. This is basically your payment to have insurance. Now, what is the deductible? This is the amount of money you need to spend on health care, not including your premiums, before your insurance starts to chip in. Keep in mind that preventative care is generally covered in full before you hit your deductible. Deductible. When talking about the deductible, we’re really talking about the additional care you need beyond those standard checkups.

No.3

What is co-insurance? This is the percentage of health care costs you pay after hitting your deductible, but before you hit your out-of-pocket max. Many plans will require you to pay about 10% of co-insurance, for example, after you hit that deductible. What does out-of-pocket max mean? This is the maximum amount of money you will spend out-of-pocket on health care in a given year. This includes your deductible but not your premium. After you hit this maximum, your insurance covers 100% of your health care costs. So once you hit that out-of-pocket max, you can go ham on health care costs. I mean, don’t really do that.

No.4

What is a copay? Short for copayment. This is a fixed amount that you pay for covered medical services. The remaining balance is covered by the insurance company. A common scenario with this is when you go to the doctor and do a $20 copay every time you see that doctor, but then you don’t pay anything after that. It’s that flat fee. All right, so now that we got that basic lingo out of the way, let’s get into the details about the different types of plans. We’ll start with the HMO. The HMO requires patients to choose a primary care physician who then handles all the recommendations and referrals to other specialists for additional care if needed. The premiums tend to be lower for HMO plans because they have special agreements with certain health care providers, but they also have more restrictions as well because you have to start with that primary care physician to really do anything else. A big thing to consider here is how much you care about flexibility with that health care option.

No.5

Do you want to be able to see a specialist without having to first get an appointment with that primary care doctor every single time? If so, it might be worth paying more for the next plan I’m going to talk about, the PPO. The PPO, Preferred Provider Organization, is the most common type of health insurance plan by enrollment, and it allows you to see in-network health care providers, including specialists, without any type of referral. The key with this plan is to stay in-network, though, because if you go out of network with any provider, you’ll likely end up paying much higher costs and spend way too much of your time going back and forth between the health insurance company and doctor. It’s just a headache, and in my experience, you want to try to stay in network. Trust me. Generally, PPO plans have higher premiums, but much lower deductibles. Now, PPO plans typically require the insured to pay a copayment each time they visit a provider or they must meet a deductible before the insurance covers that claim.

No.6

Now, the The deductibles are typically lower for PPO, so it doesn’t usually end up being a huge cost to cover these initial visits before the insurance company starts covering those costs. Pro plans are also more comprehensive regarding coverage, including many services that other health insurance programs might exclude. You may end up getting to see a wider variety of health care providers in this type of plan. It makes sense why it might be more expensive in that case, right? What is an FSA? An FSA is a tax advantage account that you can is used for health care expenses that typically comes with a PPO or an HMO. This account is offered through your employer, and you contribute pre-tax dollars straight from your paycheck to be used on medical expenses throughout the year.

No.7

The important thing to know about an FSA is that you have to decide during open enrollment, so right now, how much you want to contribute for the whole year. It’s a use it or lose it. Once you change jobs or when the year ends, any money you contributed but didn’t use, it’s gone. Now, estimating a A full year of healthcare expenses and knowing you have to remember to use it might stress you out. But with a little planning and a few helpful spending hacks, you can easily make an FSA work for you. I’ll talk more about this in a bit, so just stay tuned. Now, HDHB, the high deductible health plan, has higher deductibles and lower premiums, but typically offers the ability to utilize an HSA, Health Savings Account, to pay for qualified medical expenses using pre-tax dollars. This is a similar way that FSA does. This plan is the second most common type of health insurance plan after PPOs, and they’re similar to PPOs in that you can generally see in-network specialists without a referral. But the networks for HDHP plans tend to be higher, so you tend to have more options for what’s considered in-network. According to the IRS rules, a plan is considered to be high deductible if it has a deductible of at least $1,400 for an individual plan or 2,800 for the family plan. Also, the out-of-pocket max is capped at 7K for individual plans or $14K for family plans.

No.8

Now, these type of plans tend to favor those who have fewer medical expenses, like someone who’s generally healthy and doesn’t visit the doctor very often because you pay lower premiums and then don’t end up worrying about the high deductible if you never see the doctor. However, it’s always hard to anticipate medical expenses for the upcoming year, so you have to bank on not having too many issues for that following year. But you could save hundreds or even thousands of dollars by choosing this plan when there’s a good chance you’ll have little to no medical expenses. What is an HSA? An HSA is a health savings account that is only available if you have a high deductible plan, and it allows the participant to save for health care expenses. This can be offered through your employer, or you can open your own HSA as long as you have an eligible high deductible health care plan. You can contribute pre-tax dollars straight from your paycheck to be used on future medical expenses, and it’s not a user to lose it, like the FSA. Now, it’s a tax advantage in that contributions to HSA are withheld from your paycheck, pre-tax. So it lowers your taxable income a bit, and any earnings within the HSA are also not taxed when used on eligible medical expenses. Most HSAs also offer the ability to invest your contributions as well. Not all HSAs give this option, but it has become more common. This is a great way to build some long-term savings for health care expenses that you may have late in life. Health care expenses are typically the number one expense later in your life. If you can start putting away some savings now and then let them compound over the next 30 plus years or so, this can really add up. Some experts say that the average American couple will need about $300,000 to cover out-of-pocket expenses for health care in retirement. That’s a lot.

No.9

The IRS does put a limit on how much you can contribute to an HSA. So for the year 2021, you can only contribute a maximum of $3,600. That may not sound like much, especially when you think about IRA limits of 6K and 401K limits of 19,500. However, when you add in the investment option, and therefore the power of compounding. Okay, so if you just got that dreaded open enrollment email from your employer, you’ve come to the right place. Fill you in on that healthcare lingo, what is the deductible anyways? And then, try to help you walk away knowing which plan might be best for you? Now, I’m not saying this will be the most exciting topic, but I am going to give you some crucial information to use. When thinking about your overall financial situation, health care can have a massive impact on this. I mean, for many of us, medical emergencies might be the most expensive purchase you make in any given year. So if you want your finances to stay on track, don’t let a medical emergency derail you. Keep watching this video. Okay, so first off, what is open enrollment? This is the time when you have to decide which health care plan you’re going to choose for the following calendar year. And it’s typically November first through January 15. And once you choose that plan, you’re pretty set for the next year unless there’s some major event, like a new job or child. It’s really important you do a bit of extra research right now to choose something that you might be stuck with for a full year.

No.10

But what are the different plans out there? The main options are HMO, Health Maintenance Organization, PPO, Preferred Provider Organization, and HDHP, High Deductible Health Plan. There are other types of plans available, especially for those using non-employer group plans, but today we’ll just cover these. But before we get in the details, we got to cover some of this basic healthcare lingo. First off, what is a premium? This is what you’ll pay each year just to have insurance. Usually, this will come out of your paycheck, and employers typically cover some portion of this expense, like around 70 to 80%.