The COVID-19 pandemic hasn’t just affected Americans’ health – it’s also affected our health insurance. Around 12 million people in the United States are estimated to have lost their employer-sponsored medical insurance as a result of historic levels of unemployment.
Whether or not your health insurance status has recently changed, it’s always a good thing to understand more about what medical insurance is and how to select a good healthcare policy for you and your family. With so many options and varying levels of coverage, selecting the right medical insurance, or understanding what's offered to you by an employer, can feel overwhelming. We're here to help! Keep reading for a full breakdown of everything you need to know about medical insurance and how to select a plan that is right for you.
What is Medical Insurance?
Broadly speaking, medical insurance protects your health and your finances so that if you’re facing a healthcare expenditure following an illness or injury, you can afford to pay for the treatment you need.
What’s Covered by Medical Insurance?
Every insurance policy is different, and it's important to understand the healthcare benefits that are important to you and your family when choosing a policy. Some medical insurance covers only hospitalization, while other healthcare policies reimburse outpatient care, regular visits to the doctor, ambulatory services and so on. Coverage can vary widely when it comes to dental, vision, prescription drugs and outpatient mental health support – so if you’re selecting an insurance policy, be sure to check on these areas.
What’s the Cost?
Many full-time employers offer health insurance to workers as part of the benefit package. Usually, a workplace insurance policy means your employer will pay for monthly premiums, but you might be responsible for co-pays and deductibles. A co-pay is the cost-per-appointment to access a service, while a deductible refers to how much you must pay in healthcare expenses before the insurance kicks in. It’s a good idea to check in with your workplace Human Resource team if you’re not sure what medical insurance is available, how to use it, or what costs you’re responsible for.
Can I Purchase My Own Medical Insurance?
If you’re not covered by a workplace insurance policy, or if you want additional coverage, you can purchase your own medical insurance. Since the Affordable Care Act, many states are operating on the federal Marketplace or have their own Marketplace. Here, you can compare and purchase plans, or see if you qualify for free or discounted medical coverage. Visit healthcare.gov to learn more.
How Does Health Insurance Affect Taxes?
If your job offers employer-sponsored health insurance but requires you to pay part of the monthly premiums, your chunk of the bill is considered pre-tax spending – so it won’t count as taxable income. If you’ve purchased your own medical insurance policy, you may be able to access tax credits to help cover the cost, depending on household income.
HMO vs. PPO: Which Medical Plan Is Best?
When comparing medical insurance, you’ll come across plenty of acronyms. An HMO (Health Maintenance Organization) plan usually offers lower out-of-pocket costs, but you’ll need to visit specific doctors or hospitals that are “in-network” in order to access coverage. A PPO (Preferred Provider Organization) plan, on the other hand, gives policy-holders more freedom to choose their provider, but costs are likely to be higher. When selecting a plan, check out the list of in-network doctors, hospitals, clinics and so on. If you’re not happy with the choices, consider if it’s worth it to pay more out-of-pocket for a plan that offers a bigger provider network.
What’s a Health Savings Account (HSA)?
Instead of or in addition to health insurance, you can be more financially prepared for medical expenses with a Health Savings Account (HSA) or a Flexible Spending Account (FSA). Both of these tax-advantaged accounts let you save pre-tax dollars to help pay for out-of-pocket health expenses or to cover insurance premiums, deductibles and co-pays. An HSA can only be used if you have a high-deductible insurance plan, while an FSA must be acquired through your employer. In 2021, individuals can deposit $3,600 per year into an HSA and account-holders with a family insurance plan can deposit up to $7,200. The 2021 limits for FSAs are $2,750 for individuals.
When Is the Right Time to Buy Medical Insurance?
The open enrollment period to purchase health insurance coverage through a federal or state-run Marketplace has been extended through August 15th. If you miss the enrollment period, there’s no need to panic! It’s likely you’re eligible for a Special Enrollment Period which allows you to enroll at any time; or alternatively, you can purchase private coverage outside of the Marketplace. Moreover, low-income individuals and families can apply to Medicaid or the Children’s Health Insurance Program (CHIP) at any time. When starting a new job, your employer will inform you when workplace insurance policy kicks in – and if there’s a waiting period before you’re eligible for benefits.
What If My Employer Doesn’t Offer Medical Coverage?
If your workplace doesn’t provide healthcare coverage, your first port-of-call is healthcare.gov. There, you can see what free or low-cost public health programs you might qualify for, or alternatively, compare insurance plans and decide which you want to purchase. While there’s no longer a tax penalty for not holding health insurance, the cost of a medical emergency in the U.S. can be staggering – so it’s strongly recommended to make sure you’re covered!
If this year has shown us anything, it's the importance of healthcare. Medical insurance might seem like an easy thing to brush aside if you don't have any immediate health concerns, but don't wait for a rainy day to decide on a plan. Make sure you're covered for the unexpected (as well as the routine) by selecting a medical insurance plan that's right for you and your family.