From understanding a deductible in health insurance to in-network doctors, we’ll walk you through the basics of a U.S. employer-provided healthcare plan.
If your employer provides health insurance, take advantage of the benefit—and get ready to do some serious homework. Job-based healthcare is built on a confusing maze of networks, expenses, and out-of-pocket costs. Head spinning? Don’t worry. We’re here to help.
What are the different types of health insurance plans?
Typically, employers offer at least one of these options:
HMO (Health maintenance organization)
An HMO is typically a more economical plan, but can also be the most restrictive. You’ll need to use in-network providers, and a primary care provider coordinates your care and makes referrals. Monthly premiums are typically low, and HMOs are usually zero-deductible health insurance. To make life easy, providers usually submit claims.
PPO (Preferred provider organization)
You may wonder: What is a PPO health insurance plan? This type of insurance offers maximum flexibility, but it will cost you. PPOs usually have higher monthly premiums, as well as larger deductibles. You’re free to see any provider (in- or out-of-network) without a referral, but you may have to pay out of pocket and submit your claim.
EPO (Exclusive provider organization)
An EPO mixes features of a PPO and HMO. With an EPO, you’ll have lower monthly premiums than a PPO, and you don’t need a PCP (primary care physician) to coordinate your care. However, you won’t be covered for visits out of network (except emergencies). Like an HMO, in-network providers and hospitals are covered, but, like a PPO, you can visit specialists with a referral.
POS (Point of service)
Another blended option, a POS allows you to see out-of-network providers, but it will cost more than in-network options. You’ll also need a PCP to coordinate your care. Costs tend to be higher than an HMO, but lower than a PPO.
What are the components of US healthcare?
Here are some of the most common benefits questions we hear:
- What is a deductible?
- What is a deductible with an example?
- How do health insurance deductibles work?
Deductibles can be confusing and a little intimidating.
A deductible is the amount of money you’ll pay before your health insurance coverage kicks in and pays for all or some of your medical expenses. Plans usually have one deductible amount for individuals and another for families. Need an example of how health deductibles work?
If your health plan includes a $1,000 deductible, you’ll have to pay that amount for any eligible charges. Once you hit that mark, your insurance will pay. Deductibles can be pricey. According to the Kaiser Family Foundation, in 2020, the average health insurance deductible was $3,722 for a family and $1,945 for an individual.
A premium is what you pay for your health insurance every month. You’ll see it deducted from your paycheck on a pretax basis. You may wonder if health insurance premiums are tax deductible. That depends on your employment status and type of insurance. If your premiums are out-of-pocket, they may be deductible. However, you can’t deduct premiums that are taken out of your pretax dollars or your employer contributions.
Also known as out-of-pocket limits, this is the max you’ll pay on covered services in a year. Deductibles, copays, and coinsurance all count toward this limit, but your premiums will not.
In- and out-of-network providers
An in-network provider is a doctor, hospital, or clinic that accepts your insurance. They’re also called participating providers. An out-of-network provider does not contract with your insurance. If you see an out-of-network provider, you’ll have to pay the bill and, if allowed, submit a claim to your health insurance.
Frequently asked questions about healthcare plans
If you want to keep monthly premiums low and have zero-deductible health insurance, opt for an HMO. If you are comfortable with higher premiums and out-of-pocket expenses in exchange for more flexibility, explore a PPO, EPO, or POS plan.
An HSA and FSA are special savings accounts that allow you to save pretax dollars to pay for qualifying medical expenses, including medical, dental, and vision. (Yes, you can use it for stylish new glasses or to try out colored contacts.) You stash pretax dollars into the account and use the funds as needed.
To qualify for an HSA, you must participate in a high-deductible health plan. (We explain HDHPs here.)
An FSA is another type of health savings account, but you can only set this up through your employer as part of their benefits package. In 2022, you’re allowed to contribute up to $2,850 in pretax dollars. The IRS adjusts limits every year.
A note of caution: FSA plans usually have a “use it or lose it” restriction, meaning you have to use all the money in your account by a particular date or you lose it. Fortunately, you get a grace period. According to IRS rules, in 2022, you can roll over a max of $570 into the next year. (Go visit your podiatrist or get your teeth cleaned sooner rather than later.)
Unfortunately, you can only switch your insurance mid-year if you experience a qualifying life event. That includes the birth of a child, divorce, marriage, job loss, or death. Otherwise, you’ll have to wait to make changes until your employer’s annual “open enrollment” period. When switching health insurance mid-year, deductibles rarely carry over, so watch out.
The short answer is yes, you can have two health insurance plans. You can even have two health insurance plans in different states. Besides individual insurance, you can be covered on plans of your partner, spouse, or parents. If your plan only pays out a portion of the expenses, or nothing at all, you can submit it to your secondary insurance, upping your benefits. If you’re married, your plan is primary.
If you’re a student under 26 years old, you can carry both a university health plan and your parent’s insurance, and your parent’s insurance is usually primary. Just remember: You may be paying two sets of premiums and deductibles. (Maybe it’s better to save that money for your first home or toward tuition payments?)
This is a big one, and the answer is yes. Under the Affordable Care Act, a health insurer can’t deny you coverage, refuse treatment, or charge you more based on a preexisting condition.
You’ll need to check with your health insurance company. Before you travel internationally, inquire about international coverage for both routine medical care and emergencies and if it is billed as out of network. If necessary, you can purchase travel insurance to cover you while you’re out of the country. (Add that to your to-do list!)
Yes, generally health insurance will cover treatment for Covid-19, including vaccines and testing. However, your deductibles, copays, and coinsurance may apply, so ask your insurer.
Ready, set, insure
When you’re signing up for health insurance, there’s a lot to think about. Take your time, read your materials closely, and make the choice that works best for you and your family. You’ll be a health insurance pro in no time.