Navigating the complex world of health insurance is one of the toughest parts of transitioning into adulthood. While studies show that only 11 percent of millennials in the United States are uninsured, it’s important that millennials understand how health insurance works, where they can get it and what to do if they can’t afford it.
Here is an easy guide that covers the key aspects of American health insurance.
Health Insurance Dictionary
Before we dive in, we’ll be mentioning tons of things that may not be familiar to you. So when in doubt, refer to this.
Premium: How much you pay a month for your insurance plan. This could come out of your paycheck if you get insurance through your job or out of pocket.
Deductible: This is the amount you’d have to reach before your insurance company begins to pay.
For example, your deductible is $1,000. You need to pay for x-rays, a blood test, and several prescriptions. If those things cost more than $1,000, your insurance will begin co-paying for some of your expenses.
Coinsurance: After you’ve reached your deductible, you and your insurance will both pay towards expenses such as surgeries or emergency room visits. This means that you have to make up the difference that your insurance won’t cover.
Co-pay: Set amount you pay for a service like doctor visits or prescriptions.
Out-of-Pocket Max: This is the most you could be paying for insurance. If you reach this amount, your insurance company will cover all other expenses until the end of the year.
Health Maintenance Organization (HMO): A type of health insurance plan that only covers specific doctors and hospitals working with the HMO. The only time you’ll be covered outside of the network is if it’s an emergency.
Preferred Provider Organization (PPO): This plan has a broad range of providers, hospitals, and doctors. You’ll pay less if you use one of their providers, and seeing anyone outside of the network will cost extra.
Exclusive Provider Organization (EPO): This plan only covers one specific hospital or doctor, except in an emergency.
Health Savings Account (HSA): This is a savings account that can only be used for medical expenses, and it can be funded through pre-tax money. This type of plan can only be used if you have a High Deductible Health Plan (HDHP). Also consider that high-deductible plans have lower premiums.
Where to get insurance
These are the five most common ways to obtain health insurance in the United States. If you’re wondering why Medicare isn’t there, it’s only open to people 65 or older, or to certain younger people with disabilities.
You can get insured through the following:
Funded mainly by the federal government, Medicaid is available for low-income individuals by providing low-cost to free insurance.
- Student Insurance
Most colleges offer students health plans that are incorporated into tuition costs. Information can be found through your school’s health center.
- Employer Health Insurance
This is something you’ll have to talk to human resources about, but it’s health insurance that your job provides. You may not be eligible if you are a part-time employee.
- Health Insurance Marketplace
The marketplace is a government-run service that helps people browse and enroll in affordable health insurance online, in-person or by phone. You can find more information on their website.
- Private Insurance Company or Broker
Insurance companies and health insurance brokers are private ways to access coverage. Ranging from local to international, there’s a wide variety of companies to choose from.
Confused? It’s okay, www.HealthCare.gov has a glossary if you need further help.
How to choose a plan
Depending on which provider you chose, you have the option to select a specific plan that fits your needs. To make it easier, think about this.
How often do you get sick?
We mean sick, as in, how often do you see a specialist, require prescriptions or take a trip to the ER?
If you mainly visit the doctor for your annual check-up, a lower premium plan with a higher deductible may be the best fit you.
But if you happen to be someone who has a medical condition or someone who is suffering from a chronic illness, take a look at a plan with a lower deductible and a higher premium. Once you’ve hit your deductible, the rest of your costs will be partially covered through a co-insurance, or completely covered once you’re at your out-of-pocket max.
How insurance works
First and foremost, you can only be on your parent’s insurance plan until you’re 26.
After that runs out, this is the way insurance works for you, so pay attention.
You buy a health insurance plan through your job, the marketplace or a private company. Once you have it, you’ll be paying a certain amount of money out of pocket until you’ve reached your deductible. After that, you’ll have your expenses partially covered. If you reach your out-of-pocket max, then you’re completely covered until it resets for the next year.
Health insurance is a tricky topic, but it’s crucial for everyone to understand it. As your life changes, so will your plan, so it’s vital to understand your options. If your goal is a truly healthy life, having health insurance will be the first place to start.
Have something to add to this story? Comment below or join the discussion on Facebook.
Header Image: Adobe Stock
GIF Images: Giphy