It’s been clear for a long time that health insurance coverage is an important part of safeguarding your financial and medical future. But it’s now also mandated by the Affordable Care Act, and those without insurance will be penalized starting in 2015. So how can you find affordable health insurance? The key is being able to carefully read and compare plan details so you can distinguish between truly affordable health insurance that will protect you and your family and just plain cheap health insurance coverage that won’t provide the benefits you’ll actually use. Here are the aspects of health insurance you’ll want to understand:
- Premium
Your premium is the amount of money you pay into your insurance plan, and may be listed as a monthly, quarterly or yearly amount. If your premiums will be deducted from your paychecks as part of a workplace insurance plan, the premium could be broken down to match your pay schedule (bi-weekly, for example).
- Deductible
Your deductible is the amount of money you must pay out of pocket before your insurance will kick in and start paying for anything. Typically, the deductible and the premium on various plans have an inverse relationship, which means that raising your deductible can save you money on your premium payments. However, this can mean that you’ll end up paying quite a lot of money if you get sick without your insurance helping you out at all. It’s important to note that while you may still have a co-pay (see the next entry), preventive care such as annual checkups typically aren’t part of the deductible. So you can schedule routine office visits without worrying about your deductible at all.
- Co-Pay
A co-pay is a fixed dollar amount that you pay when you visit a care provider or pick up a prescription at the pharmacy. The dollar amount is generally the same no matter how much the visit or drug actually costs; for example, you might pay $15 for office visits, $100 for emergency room visits, $25 for name-brand drugs and $10 for generic drugs.
- Co-Insurance
Co-insurance is the portion of your care you must pay for out of pocket. It’s easy to mistake co-insurance for a co-pay, but you can normally distinguish between them because while co-pays are set as certain dollar amounts, co-insurance is expressed as a percentage. So for example, you might need to pay 20% (or 30% or 50%) of your total medical expenses if your plan has co-insurance requirements; not all plans do. Co-insurance normally applies to non-routine procedures, and must be paid on top of your deductible.
- Out-of-Pocket Max
An out-of-pocket max is similar to a deductible in some ways, but covers the total amount you’ll pay in a calendar year — including your deductible, co-pays and co-insurance. So, for example, if you’ve had some expensive treatments earlier in the year and hit your out-of-pocket max, then even an office visit that would usually carry a co-pay would be completely covered by your insurance.
Do you have any tips on comparing insurance providers or getting affordable health insurance? Share your thoughts in the comments.