Bridge into the Woods

Insurance definitions to know

Below are some insurance terms that might be helpful on your path forward.

Co-pay vs. co-insurance vs. deductible

High Deductible Health Plan and HRA 

Out of Pocket Maximum

Out-of-network care and services:

Flexible Spending Account (FSA)

Health Savings Account (HSA)

Co-pay or co-payment

A specified dollar amount paid rather than a percentage of a medical bill. A co-pay is usually paid at the time of service, but not all medical services require a co-pay.  The payment is a standard part of many health insurance plans. Insurance providers often charge co-pays for services such as doctor visits or prescription drugs or speech therapy. Please check with your insurance company if you have a co-pay for speech therapy. It is important to know if the provider is in the insurers’ network or if they are considered out-of-network and the associated costs. Sometimes out-of-network providers will have a higher cost associated to any services

Example: If the coverage you receive from an insurance plan for speech therapy has a $25 co-pay.  You will be required to pay $25 out of pocket every visit to the provider of speech therapy before the session begins.

Note: If you have a financial account such as an HSA, FSA, or HRA, consider using money from those accounts to cover the payment.

Co-insurance

The percentage of the service costs you are responsible to pay for out of pocket. 

Example: Let's say your health insurance plan's allowed amount for an office visit is $100 and your coinsurance is 20%.

If you've met your deductible amount: You pay 20% of $100, or $20. The insurance company pays the rest.

If you haven't met your deductible: You pay the full allowed amount, $100.  There might be plan discounts/exclusions for this type of service that could reduce the total charge and your portion of the bill.

Note: If you have a financial account such as an HSA, FSA, or HRA, consider using money from those accounts to cover the payment.

Deductible

The amount you pay for covered health care services before your insurance plan starts to pay. Having a $2,000 deductible, for example, means you pay the first $2,000 of covered services out of your own pocket.

After you pay your deductible, you usually pay only a co-payment or co-insurance for covered services. Your insurance company pays the rest.

Many plans will pay for certain services, like speech therapy before you've met your deductible. Check your plan details or call your insurer.  Some plans have separate deductibles for certain services.

Family plans often have both an individual deductible, which applies to each person, and a family deductible, which applies to all family members as a total dollar amount added together.

Generally, plans with lower monthly premiums have higher deductibles. Plans with higher monthly premiums usually have lower deductibles. A premium is the amount you are billed each month whether you use the insurance or not. It is the price of being covered by the insurance company.

Note: If you have a financial account such as an HSA, FSA, or HRA, consider using money from those accounts to cover payments up to and after the deductible amount is met.

Out of Pocket Maximum

Individual out-of-pocket maximum: If someone on the plan reaches their individual out-of-pocket maximum dollar limit amount, the insurance company will start paying 100% of the insured individual’s covered care for the rest of the plan year. Any expenses individuals pay also go toward meeting the family out-of-pocket maximum limit. 
Family out-of-pocket maximum: Out-of-pocket costs for each individual go toward meeting the family out-of-pocket maximum. This may include costs for deductibles, co-insurance, and co-pays.  This is any dollar that is used for any service that requires a payment from the individual.  If the family out-of-pocket maximum is met, insurance company takes over responsibility for paying 100% of everyone covered in the family’s costs for the rest of the plan year.

Flexible Spending Account (FSA)

Are you planning to spend a fixed amount of dollars on speech therapy, or going to have other medical expenses that you know you will be taking care of during the year?
If you have an employer that offers this benefit, you might consider opening a flexible spending account (FSA) to take advantage of the tax dollar savings. The plan will have more specifics about what you can use FSA dollars to pay for. Sometimes, employers also will contribute to this type of account. 
Contact your employer to get the specific details about your company’s FSA and how to sign up.
The IRS also has complete information on these accounts if you go to their website. (https://www.irs.gov/publications/p969#en_US_2015_publink1000204174)

Health Savings Account (HSA)

Health savings accounts (HSAs) are like personal savings accounts, but the money in the account is used to pay for healthcare expenses. You — not your employer or insurance company — own and control the money in your HSA.
One benefit of an HSA is that the money you deposit into the account is not taxed. To be eligible to open an HSA, you most likely will need to have a high-deductible health insurance plan. These are more dollars that you are able to spend on healthcare costs.
Contact your employer to get the specific details about your company’s HSA and how to sign up. Some companies will offer incentives and contribute a yearly amount of money to these types of accounts. Therefore, it might be a good idea to go through the bank your company uses. If your company does not offer this type of account, you can still go to a bank that offers this service to take advantage of tax-free dollars. 
The IRS also has complete information on these accounts if you go to their website.  You will need to look at the different options to determine what type of account is right for you.

Out-of-network care and services:

Most health plans have a network of doctors. These doctors agree to give plan customers discounted rates for using their services. If you go to doctors or facilities that do not participate in your plan’s network, your costs may not be covered.* What you pay for out-of-network care may not be applied to your out-of-pocket maximum. It’s important to ensure providers are in your plan’s network before seeing them.

High Deductible Health Plan and HRA

Definition from Healthcare.gov
A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more healthcare costs yourself before the insurance company starts to pay its share. A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes.
For 2021, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, co-payments, and coinsurance) can’t be more than $7,000 for an individual or $14,000 for a family. (This limit doesn't apply to out-of-network services.)
For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, co-payments, and coinsurance) can’t be more than $7,050 for an individual or $14,100 for a family. (This limit doesn't apply to out-of-network services.)