Breaking It Down: Your Health Insurance
One of the biggest rights of passage into adulthood is hopping off your parents’ health insurance plan and getting your own. Thanks to the Affordable Care Act, this is something your full-time employer has to give you, whether you understand how it works or not. Health insurance is a real money-saver, so it’s pretty important you know the ins and outs of your specific plan. But sadly, just like filing your taxes, health insurance can be a little complicated. Here’s a go-to guide for understanding your health insurance:
Where do you get health insurance?
Like we said above, health insurance is a basic part of your benefits from a full-time employer. If you’re out in the adult world working your tail off at your big girl job, you definitely have a health insurance plan as a part of your work. Depending on your employer’s plan, you get a certain part of your paycheck taken out to be able to have healthcare coverage. This is called your premium.
If you aren’t working full-time (or for some people, even if you are), you’re a dependent on your parents’ plan. The ACA lets you hang out on there until you’re 26.
A lot of schools will also allow you to sign up for their health insurance plan. This is especially good for those folks headed to graduate school full-time after turning 26.
What’s a deductible?
Your health insurance deductible is the amount of out-of-pocket costs you rack up before your health insurance steps in. This is set at an annual cap, and depends on the kind of plan you have. If you’re the only one on your plan, you’ll have a smaller deductible than those with dependents or a family plan.
For example, if your plan has a $5,000 deductible, this means you pay $5,000 out-of-pocket costs before your health insurance steps in.
Coinsurance is the shared cost you have with your insurer. For example, say you have a health catastrophe and you spend all $5,000 of your deductible. From there, you start paying with coinsurance. If you have a 20 percent coinsurance rate, and you spend $1,000 more than your deductible, you will pay $200 and your insurer will pay $800.
What’s an out-of-pocket maximum?
Your health insurance plan will spell out an out-of-pocket maximum, which means the maximum amount of your own money you have to spend before your insurer steps in entirely. Say your out-of-pocket maximum is $6,000. After you’ve paid your $5,000 deductible and the $200 from your coinsurance rate, your insurer will start paying for everything.
And what about that copay thingy?
Copay is the part of health insurance you’re probably most familiar with. It’s what you deal with every time you get a physical or a small prescription. For example, if your copay on your plan for a wellness visit is $15, that’s how much you need to write a check for at your annual check-up. Because your health insurance really doesn’t want to step in after your out-of-pocket maximum (costing them a ton of money), they make your copays pretty cheap so you stay healthier.