Health Insurance

Deductible

The amount you are required to pay yourself before your insurance company starts contributing its share. Deductibles are cumulative and apply to all medical expenses during a calendar year. They reset each year on January 1.

Coinsurance

The percentage share of the bill you are required to pay after your Deductible. The percentage varies depending on the plan you choose. A 20 percent coinsurance means that the insurance company pays 80 percent and you are responsible for the other 20 percent. All health plans have a maximum out-of-pocket limit that caps the amount you pay for expenses in a plan year. Once you reach the limit, your health plan will cover the rest.

Copayment

A copayment is a flat fee you pay for treatment. For example, you might be responsible for paying $250 for an emergency room visit or $50 for a specialist visit.

Non-medical Expenses

Non-medical expenses are difficult to quantify. They are unique for each individual because they are based on lifestyle or personal circumstances. Expenses might include lost wages for the patient and perhaps a caregiver, transportation costs, childcare costs, and other non-insurance expenditures.

Premium

The amount you pay, usually each month, for your insurance coverage. You pay a premium whether you use the coverage or not.

A High Deductible Health Plan (HDHP) is what the name implies: a Health Insurance policy with a high Deductible. The purpose of a high Deductible plan is to keep premiums lower, but it means that the insured takes on a greater share of the medical expenses. In 2017, the Deductible in an HDHP is at least $1,300 for an individual and $2,600 for family coverage, and the deductible must be paid by the insured before health insurance begins paying for anything.

Even after the deductible has been met, there are additional medical expenses that need to be paid by the insured until the max out of pocket limit of the health plan has been reached. These expenses include copayments (a flat charge for medical services), co-insurance (insured’s share of the cost, and can range from to 10 to 40 percent of the expenses depending on the health plan). Obamacare limits the out of pocket maximum expenses paid annually by an insured on a health plan. For 2017, the out of pocket maximum can be no more than $7,150 for an individual plan and $14,300 for a family plan before any subsidies received.

A Health Savings Account (HSA) is a tax-advantaged savings account used to pay for current health expenses and save for future qualified medical expenses on a pre-tax basis. HSAs are only available to those who are insured under high-deductible health plans (HDHPs). Most people are familiar with Flexible Spending Accounts (FSAs), but HSAs are different. For example, contributions can be made by anyone (insured, employer, or anyone else). In addition, the funds roll over each year and remain in the account until they are used by the account owner. HSAs follow the account owner through job changes or retirement, and can even be passed on to a beneficiary.

To qualify for an HSA one must be covered under a High Deductible Health Plan (HDHP), not claimed as a dependent on a previous year’s tax return, not be on Medicare, and have no other health coverage. The IRS limits the amount of money that can be deposited into an HSA each year.

Those who do not qualify for an HSA may be eligible for a Health Reimbursement Arrangement (HRA). An HRA is an employer-funded, tax-advantaged health benefit plan that reimburses employees for out-of-pocket medical expenses. An HRA, however, is owned by an employer not the insured.