Money News

First, let's review how medical plans work. Here are some key terms you should be familiar with:

• Premium: This is the amount deducted from your paycheck to maintain your health insurance coverage. You pay the same amount regardless of how much — or how little — you use your coverage.
• Deductible: This is the amount you must pay out of pocket for covered medical services before your insurance starts to contribute. For example, if you have a $1,000 deductible, you'll need to pay $1,000 in eligible expenses before your plan’s coverage kicks in.
• Coinsurance: Once you've met your deductible, coinsurance is the percentage of the cost of covered services that you're responsible for paying. For instance, if your plan has a 20% coinsurance, you'll pay 20% of the cost of covered services, while your insurance will cover the remaining 80%.
• Copay: Some plans charge a flat fee for certain services, like doctor’s office visits and prescriptions. This charge, which is often around $20, $30 or $40, is called a copay. Instead of paying a percentage of the actual cost, as with coinsurance, a copay stays the same for a given type of service every time you use it during the year. Note: Copays often do not count toward your deductible.
• Out-of-pocket maximum: This is the maximum amount you'll have to pay for covered services in a given year. Once you reach this limit, your insurance will cover 100% of the cost of covered services for the remainder of the year.

Usually, plans with higher premiums have lower deductibles and out-of-pocket maximums. Likewise, plans with lower premiums tend to have higher deductibles and out-of-pocket maximums.

To decide if you need to pay a higher premium to keep your health care costs lower, start by evaluating the amount of care you expect to need for yourself and your covered family members. If it’s mostly preventive check-ups and occasional doctor visits, you probably don’t need to pay a higher premium and can keep more of your paycheck instead. (Remember, your in-network preventive care, like annual physicals, is free.) On the other hand, if you think you might need a lot of medical care or expensive medications, and you don’t like the idea of high out-of-pocket expenses during the year, you might want the predictability of a higher-premium plan.

Next, look at how you’ll pay for your medical and prescription costs with each plan. Compare deductibles (the amount you owe before the plan begins sharing costs), coinsurance (the percentage of costs you pay after meeting the annual deductible), and/or copays (the amount you pay at the time of service). Consider how much money you expect to have on hand to pay these costs as they come up.

It's also important to review the network of health care providers included in each plan. Make sure your preferred doctors, specialists, and hospitals are in-network to avoid unexpected out-of-pocket expenses. While some plans offer out-of-network coverage, your costs will be higher than if you stayed in network. And some plans only provide in-network coverage, so make sure you’re comfortable with the available provider network if you choose an in-network only plan.

Finally, look at the tax-saving accounts available with each plan. Only high-deductible health plans allow you to contribute to a Health Savings Account (HSA), which is an account you own for life and can use to pay for current and future medical expenses. Other plans that don’t qualify for an HSA allow you to contribute to a Health Care Flexible Spending Account (FSA), which also saves you money on taxes but has lower annual contribution limits and restricts your ability to roll over a balance at year-end. Contributing tax-free money to a health savings or spending account can save you a significant amount of money in the long run.

The money that you contribute from your paycheck to an HSA or FSA isn’t taxed, which means that you’re essentially getting a discount on the purchases you make with that money — as much as 20% or more, depending on your income tax rate. Make the most of this discount by using your HSA or FSA funds to pay for your medical care, prescriptions, eyeglasses, dentist bills, over-the-counter drugs, first aid supplies, cold medicine, menstrual supplies, and much more. Visit your HSA or FSA administrator’s website to learn more.

Annual check-ups, vaccinations, and cancer screenings are covered at no cost when obtained as part of your recommended in-network preventive care. These services can help detect and address health issues early on, potentially saving you money in the long run. And, seeing a primary care doctor for a physical each year helps build a relationship with a health care professional who knows your medical history and can keep an eye on your overall health.

Virtual doctor visits can save you both time and money compared to traditional appointments, especially at night or on weekends when your only in-person options are more expensive urgent care centers or hospital emergency rooms. Of course, if you’re experiencing a true emergency, go to the nearest emergency room or call 911.

When taking the same medication long-term, get 90-day supplies through home delivery or your local pharmacy to save money and eliminate the hassle of needing more frequent refills. It’s also a good idea to research the prices of medications at different pharmacies, since the cost can vary from location to location. And, always request generic when available and appropriate for your needs, since the cost will be significantly less than the brand-name equivalent.

If you’re having an expensive elective procedure that is not time-sensitive, consider scheduling it for later in the year when you may have met your annual deductible and will have to pay less out of pocket.

Often, additional programs and resources are available to medical plan members at no additional cost, such as chronic condition management, prenatal education, or even wellness classes. Or, you might be eligible for discounts on gym memberships or various health products and services. Review information about your benefits on this website or visit your medical plan’s website to learn more.

Along these lines, if you have access to a free employer-sponsored wellness program, take advantage of it! Typically, you’ll be offered the opportunity to take a health assessment to pinpoint any priority areas, as well as a wide range of wellness activities to help you improve your well-being.