H: Using Your Health Insurance to Pay for Care

Card H-1, Paying for Health Care with Insurance

Insurance Terminology

Premium 

The amount paid per month for an insurance policy. 

 

Allowed Amount 

The negotiated amount that a health care plan has agreed that providers will be paid for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.”

 

Co-Insurance 

A percentage amount of the allowed cost of your medical care that you are required to pay. For example, with an 80/20 plan, if the charge for medical services was $100, and you had met your deductible, of the $100 charge you would pay 20%, or $20, and your insurance would pay the remaining 80%, or $80.

 

Co-Payment 

A fixed amount you may be required to pay for office visits, pharmacy, emergency room, outpatient care, labs, surgeries, etc. prior to or after meeting your deductible.

 

Deductible 

The annual amount that your insurance company requires you to pay for medical services before they will start to pay for the care that you receive. Except for certain preventive services, and those for which there is a co-payment, commercial carriers typically will not pay for any health care services until you have met your deductible. Once the deductible has been met, you most likely will still be required to pay something for the health care services which you receive until you have met your out-of-pocket maximum.

 

Out-of-Pocket Maximum (Individual and Family) 

The most that you can be required to pay for covered medical costs within a given plan benefit year, not including your monthly premium. This typically consists of the amount that you pay for deductibles, co-pays, and co-insurance.

 

H-2, Paying for Health Care with Insurance

High Deductible Health Plan

A plan with a higher deductible (as defined by the IRS) than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share. A high deductible plan can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with tax-free money.

 

H-3, Paying for Health Care with Insurance

Premium Tax Credit 

A tax credit, or subsidy, used to lower your monthly insurance premium. The amount of tax credit is based on household income and is only available on insurance plans purchased on the Marketplace. As a rule, the lower your household income, the greater the subsidy. Subsidies do not apply to group or employer sponsored health care coverage.

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H-4, Paying for Health Care with Insurance

Health Savings Account (HSA) 

A type of savings account (sometimes offered by an employer) that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. You are able to lower your overall health care costs by using untaxed HSA dollars to pay for deductibles, co-payments, co-insurance, medications, and other qualified health care expenses. HSA funds generally may not be used to pay premiums. HSA accounts can be rolled over year to year and remain with the employee upon termination of employment. HSA funds may be invested and earn interest that is tax free.

Learn more: https://www.healthcare.gov/high-deductible-health-plan/hdhp-hsa-information/