Health Insurance: What are you paying for?
Picking annual healthcare options can be a confusing process.
Right now, the average full-time worker pays just over $5,500 a year for family coverage. There are three basic insurance concepts: premiums, deductibles and out-of-pocket maximums.
A premium is the amount that must be paid for one’s health insurance plan. Nearly half of all covered workers select PPO coverage, which stands for “preferred provider organization.”
29 percent of all covered workers select HDHP coverage, or “high deductible health plan.” 16 percent of all covered workers select an HMO, or “health maintenance organization” coverage, and six percent of all covered workers select POS, which stands for “point of service” coverage.
“The preferred provider organization has in-network and out-of-network doctors so if you go to the doctor that your health plan has a relationship with, you’re going to pay less,” said Scott Miniea Program Manager, Insurance Counseling Services, Primaris. “HMOs use your family care provider as kind of the gatekeeper. You can’t go see other specialists unless they refer you to those other people.”
Most health plans also include an annual deductible, which is the amount a person is required to pay before coverage kicks in.
According to the Kaiser Family Foundation’s 2018 Health Benefits Survey, the average PPO family deductible is $3,000, and it’s just over $1,200 for individuals. All plans also include an out of pocket maximum, which is the maximum amount of money a person can be charged in a coverage period. The out of pocket maximum never includes a premium.
“It’s a limit on your out of pocket costs. For example, $5,000 might be your out of pocket max,” Miniea said.
If you have a high deductible health plan, you may be eligible for a health savings account.
“There are two parts: you have an insurance product and then you can open a bank account where you can set money aside to help fund any claims that you have,” said benefits broker Shannon Brenneke. “The money you put in that bank account is tax free. So, if you’re using that money for any health insurance expenses as far as medical copays and deductibles, you’re not paying taxes on that money. The health savings plan is really a tax savings tool.”
