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When being offered a job, many companies will put together a benefits package for you. This will include information about your salary, paid time off, holidays, investment options and insurance. Your company may offer you different insurance options; you should choose the option that best suits your needs, rather than the one that is the cheapest.
The most common forms of insurance are:
· HMO (Health Maintenance Organization): HMO’s cover only care by doctors who agree to treat patients in accordance to the HMO guidelines and restrictions. HMO’s can be tricky, you work with a primary care physician, but need to get a referral to see a specialist or a different doctor and your primary care physician cannot authorize that referral unless the HMO guidelines say it is necessary. An HMO is normally your least expensive insurance option due to the limited amount of choices you have for care.
· POS (Point of Service): A POS is a combination of a HMO and PPO. You chose a primary care physician within network and that is the person you see for your care. If you need to be seen by someone outside of the network, a referral can be made but only some compensation will be made to you by the insurance company. A POS also offers lower medical costs because you are exchanging the cost for more limited choices in care.
· PPO (Preferred Provider Organization): PPO’s allow you to see any doctor who is in your network. These work like memberships; you pay a fee to be seen by a doctor and receive your care at a substantial discount. Your network is a group of doctors who utilize this membership and is considered a “preferred” provider. A PPO is normally the most expensive insurance option as you have the least amount of restrictions for care.
In addition to insurance, you have several options that will help offset some your medical expenses:
· Flexible Spending Account: A flexible spending account allows you to set aside a portion of your earnings to pay for qualified medical expenses. Money put into a FSA is not subject to payroll tax. This can cover anything from bandages to contacts to out of pocket expenses your insurance didn’t cover. Your employer will be able to provide you with a list of qualified expenses. However, keep in mind that a FSA goes from Jan 1 to Dec 31 and what money you don’t use, you lose.
· Health Savings Account: HSA’s are a lot like flexible spending plans. Like the FSA, funds contributes are not subject to federal income tax at the time of deposit and the account allows you to pay for qualified medical expenses. The major difference is that, unlike a FSA, you can roll over the funds you have accumulated year to year if you have not spent it.
· Health Reimbursement Account: HRA’s are IRS-sanctioned programs that allow an employer to reimburse medical expenses to the employee, which offers them tax advantages to offset health care costs. Basically, if you go to the doctor, you will pay out of pocket and then your employer will reimburse you for your expenses. Health reimbursement accounts are usually offered in lieu of insurance.
Three of the major things you will see in the insurance world are co-pays and deductibles.
· Co-pay: A co-pay is a payment, outlined in your insurance policy, that you make at the time of service. This may be anywhere from $15-$25 per trip, or a percentage of the total bill. In your insurance policy, you will see something that outlines what the co-payment will be. Example: $20 co-pay/visit in network which tells you that you will pay $20 each time you visit an in network doctor. When visiting a doctor out of network, you need find out what you’re out of network co-pay will be through your insurance provider, as in some cases your insurance may not cover a visit to an out of network provider, leaving you to pay the entire bill. Co-pays also exist on prescriptions; you will see something along the lines of “Drug card with co-pay = greater of $10/$30/$50 or 25% for all plans, with $1,000 maximum drug out-of-pocket limit per calendar year” in your insurance policy.
· Coinsurance: Coinsurance and copayment are sometimes confused with each other, but while co-pay is typically a fixed amount paid, coinsurance is a percentage that you have to pay after you have exceeded your deductible. For example, if you have an 80/20 coinsurance, your insurance plan will pay for 80% of your eligible medical expenses and you are responsible for the remaining 20%.
· Deductible: Your deductible is the amount of any service not covered by your insurance. It is the amount of money you will have to pay out of pocket before the insurance company will cover any expenses. For example, I had a $1000 deductible and while I was in physical therapy, I had to pay the majority of my physical therapy out of pocket until I hit $1000, then the insurance began covering my expenses. Deductibles are usually a yearly amount, so starting Jan 1, you revert back to $0. Some services, like normal doctor visits, may be available without meeting the deductible first.