This post is from guest author Logan Randall.
Many eager and educated millennial employees are entering the workforce to make their impact as the baby boomer generation is considering retirement within the coming years. Many insurance companies have been putting focus toward millennials due to a recent survey showing more than 50 percent of millennial employees don’t understand their benefit options, and would rather turn down insurance entirely than research health coverage. This can be troublesome to their debt if there were to be an incident that required emergency care. Also, the ACA requires most individuals to obtain health coverage or pay a penalty with their federal tax return.
Understanding the Basics
Price: Understandably, cost is the primary concern for millennials, but it’s not about what is paid, it’s about accommodating personal and future needs. Consider how much health care is needed. The amount that is paid directly out-of-pocket varies quite a bit depending on the type of plan.
Network: A health plan’s network consists of the doctors, health professionals, hospitals and service facilities it contracts with to provide (generally) lower costs of healthcare for its members. Some plans are flexible and let the user get out-of-network treatment and still have care covered, though that requires filing a claim and a likely chance of paying more money out-of-pocket.
Cost vs. convenience: It’s common to find that the least expensive plans have smaller networks, sometimes limited by location. If that isn’t an option (for example if there is frequent travel involved outside the network region) consider getting a broader network.
The ideal coverage has a large network across not only an entire state, but the entire country (and even internationally) as part of a specific insurance program. It is troublesome in the case of an emergency if the nearest hospital isn’t part of the insurance plan.
Metallic health plans
ACA plans are categorized as Bronze, Silver, and Gold:
- Bronze plans will have the cheapest monthly bill (premium), but pay a larger share of the cost when upon receiving care.
- Silver plans monthly payments lower than a gold plan, but more than bronze. Your out-of-pocket costs will be less than a bronze plan, but more than a gold plan, unless you’re eligible for cost sharing reduction.
- Gold plans have a higher monthly bill, but will have lower costs for when the plan is being used. What does not change is the network that is being paid for and the actual services covered.
What About an HSA (Health Savings Account)
A Health Savings Account works in tandem with a high-deductible health plan to let enterprising individuals take more control of their healthcare financials. There are three major tax advantages to these plans:
- Money put in is 100 percent tax deductible
- Funds taken out for qualified medical expenses (which is pretty exhaustive) are not taxed
- Interest earnings accumulate tax-deferred and are tax free when paying for qualified medical expenses.
The upside to these plans includes lowering yearly taxable income, earning interest on unused funds, generally lower rates, the ability to invest in a variety of mutual-funds with no transaction fees and the flexibility to take the health savings account along if there is a change in health care plans.
Understanding health insurance isn’t something that happens overnight. If you’re having trouble understanding, find help from someone who can explain plans and networks as a whole. Choosing insurance plans with little knowledge can possibly hurt financially, or fall short in case of emergencies, so it’s important that you do your research