Congratulations! You’ve graduated college and now have your first job. However, your 26th birthday is coming up in a few years, and you aren’t at all sure what it means to be “kicked off” of your parent’s insurance.
Are you wondering, “what will health insurance costs look like for me on my own?”
And if you’ve never had health insurance through a parent, here is your time to soak in the knowledge you need to make a smart decision for yourself.
Maybe you’ve re-entered the workforce after some time but need updated information on today’s health insurance terminology. No matter the situation you’re in, something we hear most often is that understanding health insurance costs can be confusing. We get it.
There are a myriad of options out there with little to no education available, which is especially crucial for younger people. As a result, those young people grow up and find themselves facing the need for health insurance.
Whether it’s something you can get through a job, agency, or other parties available, it’s important to understand what you’re paying for – especially when it comes to coverage regarding your health.
On top of the number of options available, there are a ton of terms you may have heard over the years that don’t make any sense to you. Our hope is that we can offer a more clear understanding of what various health insurance costs mean and what plans consist of.
First, let’s take a super quick look at the history of health insurance in the United States.
Health insurance is by no means a new concept and has been in development since the 1930s. During the construction of several major railroad tracks, employees doing the building were often injured and needed medical care close to or on-site. For a while, employees would go to nearby hospitals, receive their care, and have deductions taken from their pay over time to cover the costs.
One of the earliest examples of a health insurance plan was conducted by Blue Cross Blue Shield for teachers of Baylor University Hospital in Texas in 1929. This plan said, “…each teacher would be eligible for 3 weeks of hospital care in return for a payment of $3 a semester or $6 a year.”1
Through the 1930s and 1940s, coverage included additional factors such as dependents and surgical needs. Dental institutions also hopped on the health insurance trend at the time.
Today, there are a number of group and individual policies available through a wide array of insurance providers and agencies.
A health insurance cost is also known as a premium and is the amount you pay every month to maintain having health insurance, also known as coverage. But that is likely not the only thing you will be expected to pay. You may also see the words deductible, co-pay, and coinsurance come up. But we’ll get to those in a minute.
To get an idea of how much your premium should be, first take a look at your medical uses. Do you…?
- Visit the doctor often?
- Take regular prescriptions?
- Have a spouse or children who may need coverage as well?
It’s crucial to gauge how much medical coverage you’ll need before you dive in. If you are young and fairly healthy, you may be better off paying a lower premium each month. However, regardless of age, if you see a doctor often and require medications, you may need to consider paying a higher premium for more frequent coverage.
You’ve probably heard that there are “good” and “bad” premiums. But what does that mean? Let’s take a closer look at what paying a higher or lower premium determines.
Having a lower premium does mean you’ll owe less every month. However, if you ever do need care, you may owe more out-of-pocket in order to receive that care. That’s why lower premiums are often suggested for young and healthy individuals.
A higher premium means you will owe a lot more each month. But in the case of required healthcare, you may find that a fair chunk of your future medical expenses is low. If you can afford a high premium each month, it’s an ideal plan for those who need consistent medical care throughout the year.
As mentioned before, we’ll take a look at some common words or phrases used when talking about health insurance.
Your benefits include what is covered under your plan and for how long you are covered. Typically, employers require you to re-enroll for health insurance each year as everyone’s circumstances can change throughout the year.
Your coinsurance amount is the amount left that is owed after you’ve received a medical service. For example, if you had a doctor’s appointment but your plan only covers 80% of the visit, you still owe 20%. If the doctor’s visit costs $200, your insurance covers $160. This means you owe $40.
If your plan and its providers allow co-pays, you’ll be required to pay a certain amount at the time of your visit. For example, you may need to see a dermatologist and their co-pay is $50. That $50 is how much you will owe at your visit.
Your deductible is how much you will need to pay before your health insurance will cover their coinsurance portion. As an example, if you have chosen a plan with a $1,000 deductible, you are expected to pay $1,000 of your own money before your health insurance will begin paying their 80% coinsurance. Health insurance companies often call this “meeting your deductible”.
This type of account consists of money set aside by you and your employer to use before the end of the year. An FSA plan can help fund doctor’s visits, dental work, vaccines, and more.
This specific type of plan will ask you to choose a primary doctor that you will see during the duration of your plan period. If you have this type of plan, be sure anywhere you go accepts individuals with HMO coverage.
Similar to an FSA account, an HRA sets money aside for your healthcare needs. This money is then used to reimburse you for covered services only. By using this plan, you can access tax benefits for both yourself and your employer.
Also like an FSA account, you set aside money for potential medical care needed in the future. However, with this plan, you do not need to spend your nest egg within the year. Keep in mind that this type of plan often is paired with a high deductible health plan.
An in-network provider is someone who is approved to use within your specific chosen healthcare plan.
Someone who is out-of-network means your plan has not approved to cover that provider. You may still see this person if you wish, but you will likely need to pay for all costs of services, visits, testing, and beyond on your own with no additional help.
This program is for those 65 years or older to help cover certain medical expenses.
Open enrollment is the period of time in which you can switch, stay with, change, or update your medical coverage plan. This is the perfect time to evaluate your coverage and consider what kind of coverage you’d like more or less of.
An outpatient service is one that does not require a hospital stay. An inpatient service may include room and board fees, which may or may not be covered by your plan. Double-check to make sure.
Any out-of-pocket expenses are those you need to make yourself without the help of insurance. For example, your doctor’s visit may be covered with a $20 copay, but there was a test they did during your visit that was not covered. The test cost $80 and the copay cost is $20. So in total, your out-of-pocket total cost for that visit is $100.
A PPO is a great plan to have and offers more flexibility when it comes to providers and services covered.
Ready to explore your PPO options? Give Diana Reeves a call at 713-806-5966 today.
Lastly, a provider is anyone you may see when you seek medical services. This includes doctors, dentists, surgeons, and so on.
Diana Reeves works around the clock assisting those with nationwide PPO network health, dental, vision, term life, critical illness, accident, and income protection. Through her vast network, she can find the best plan for you with optimal coverage in mind. Ask any questions you have about health insurance costs, coverage, and more.
Whether you’re searching for coverage for yourself or your entire family, there’s no better time than now to see what Diana Reeves can do for you.
Contact Diana Reeves today for a free quote! (713) 806-5966!