Five Items to Consider When Buying Health Insurance
Decide What Style of Health Insurance Policy to Purchase
There are basically only two styles of health insurance plans - traditional copay plans and HSA qualified high deductible health plans.
Traditional copay plans are the most common type of policy sold in today's market place. These policies offer a designated copayment for certain healthcare services without the deductible being applied. Most people are familiar health plans that offer copayments for office visits, prescriptions and urgent care centers. With a copay type of health insurance plan your medical deductible will only apply to major healthcare services such as inpatient hospitalizations or outpatient surgery.
HSA qualified high deductible health plans (HDHP) are not as popular as copay plans but they deserve careful consideration due to their affordable premiums and tax advantages. With a HDHP all medical expenses (except preventive care) are subject to the policy deductible. The IRS has specific guidelines concerning minimum and maximum deductibles and out of pocket expenses. Most HDHP's pay 100% after you meet your deductible, helping to keep your out of pocket expenses low in the event of a hospitalizations. The main advantage of buying a HDHP is that you are able to open a tax free savings account with the bank of your choose to pay for qualified medical expenses.
Choose the Right Medical Deductible
The amount of the medical deductible that you select has the most bearing on the cost of your health insurance. In today's market most individuals purchase a health policy with a deductible in the range of $2,500 to $3,000. If you look at the cost of a lower deductible, such as $500 or $1,000 then the monthly cost will increase 30-40% when compared to a $3,000 deductible medical plan. Remember, with a copay style of health plan your deductible only applies to major healthcare services such as hospital expenses, so if you carry a higher deductible you still have coverage for the most common healthcare services - such as office visits - without having to meet the deductible.
A good way to determine what the best deductible to select is to look a how long it takes to make up the difference in deductibles with your premium savings. If purchasing a plan with a $2,500 deductible saves you $100 a month when compared to the same plan with a $1,000 deductible, then it only takes 15 months to save the difference in premium savings! ( $2,500 - $1,000 = $1,500).
Consider a Policy With a Limited Number of Office Visit Copayments
Insurance companies in Georgia sell their most affordable health insurance plans with a limited number of office visit copayments. If a policy provides three office visit copayments in a plan year and you have more than three visits then your medical deductible will apply for any additional office visit charges. It is important to remember that your office visit charges will still be discounted as long as you see an in network provider.
In Georgia several carriers offer plans with limited copayments, Aetna sells their Value plan with five copayments, Blue Cross Blue Shield of Georgia sells the SmartSense policy with three copay's, Humana sells the Copay 70 plan with three copayments and the Copay 80 plan with six copayments.
Be Mindful of Your Maximum Out of Pocket Expenses
When you purchase a copay style of health plan you will typically be required to pay a certain percentage of your medical expenses once you have met your deductible. This is called coinsurance and the combined total of your deductible and coinsurance is defined as your maximum out of pocket limit. When shopping for health insurance most carriers will pay either 70% or 80% after your deductible, this means you will be responsible for the remaining coinsurance (30% or 20%).
All insurance companies will limit the amount of coinsurance you will be responsible for before the carrier pays 100% of the remaining charges. Most carriers limit their coinsurance maximums to anywhere from $3,000 to $5,000. If you then combine your coinsurance maximum with your deductible you will get the maximum out of pocket limit. Purchasing a policy with a high out of pocket limit may keep your premiums affordable, but if you have an expensive hospital stay then you will have to pay more.
Learn the Advantages of a HSA Health Plan
The advantages to an HSA health plan are the combination of low monthly health insurance premiums combined with the tax free benefits of your health savings account (HSA). The IRS stipulates that you must purchase a high deductible health plan (HDHP) in order to open and fund your HSA. Since all non preventive medical expenses are first subject to the policy deductible, the cost for a HDHP is very affordable. Also, most HDHP's pay 100% after you meet the deductible so this limits your maximum out of pocket expenses. Compare rates for HDHP's from multiple companies on our quote engine.
To determine the true cost of health insurance with an HSA health plan must consider your tax savings. The IRS does limit the amount you can deposit into your HSA each year depending on whether you purchase a HDHP with self-only coverage or family coverage. This is important because a family can contribute roughly twice as much as an individual. For an example, if a family funds their HSA with $5,000 and their tax bracket is 20%, then they would recognize a tax savings of $1,000! To learn more visit our how HSA health plans work web page or give us a call.