Health insurance can be difficult to understand. There are a lot of terms and definitions which can confuse if you don’t understand them. Health insurance can help you save money on medical bills and can keep you covered in case of a catastrophic injury or illness. But you have to understand how to use it to your benefit.
Deductible
A deductible is the money you pay out of pocket for medical care before your health insurance medical care payments kick-in. This is something that you agreed to when you first signed up with your insurance plan. Generally speaking, the higher the deductible, the lower your premiums will be. Many plans have high deductibles to keep your insurance premiums down
Your deductible can be made more manageable with a Healthcare Savings Account (HSA). HSAs are available for plans with a large deductible. You can budget you health care expenses by depositing money into this account on a regular basis. The HSA has a debit card which can be used at the doctors office or pharmacy when needed. Money deposited into an HSA can be taken out of your paycheck pre-tax so that you have a tax benefit that you would otherwise not have.
Although depositing money into an HSA takes a little discipline, it can help you manage your healthcare costs effectively.
- Have your employer take money from each paycheck and deposit it in this account.
- Electronically have your bank deposit a certain amount monthly if you don’t want your employer to do so.
- If you make regular deposits automatically from your paycheck or bank account, you will eventually get used to the amount of money you have remaining to spend on other things.
- Try to deposit the maximum yearly amount into the account. What you don’t use carries over to the next year. Then you will have a little buffer should your bills be higher the next year.
Copay
Your plan may require you to pay money to your medical office or pharmacy every time a service is provided. Usually the copay is a small amount. This copay is a way for insurance companies to discourage visits to the office for simple problems that really don’t require a physicians care. The medical office is required to collect it at the time of service
Coinsurance
Your plan may have coinsurance as part of the package. This is an agreement that your insurance will pay a certain percentage of your medical bills and you will pay the rest. Usually the coinsurance will begin after your deductible for the year is met. Not all plans have coinsurance. Many will begin to pay for medical expenses at 100% after the deductible is met.
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This article is written for general informational purposes only and should not be construed as giving medical advice. Seek the counseling and care of a medical professional if you are sick or before making any decisions regarding your health.