Adulting: Understanding Health Insurance (pt. 2)
Updated: Oct 7, 2021
"You mean I have money just sitting there that I can use? Soo, I didn't really have to use my own funds to pay for all of those chiropractor visits? What?!" I was 23 years old, had left a job for something better, and at the time, knew NOTHING about a Health Savings Account (HSA). The account with all of this money in there straight chilling. I only found out about it right when I finished my exit interview and the Human Resources representative told me about it. It felt unreal, and I was surprised that I could take advantage of funds earned from a previous employer. "That's dope as hell! What else am I missing out on," I asked myself.
Last week we covered the basics of health insurance and I promised there'd be more to come. It's my hope that as we continue learning about health insurance and getting through more complex terms, that we are able to make knowledgeable decisions as it pertains to our health. There are many people who knew every single term that was provided last week, but can they apply the information as they begin utilizing their health insurance? Is it enough to just "know" the terms? I'll answer that with a strong NO. As mentioned in the last post, there are four things one has to be able to do in order to be considered as health literate: (1) Be able to Find a health insurance plan (2) Be able to evaluate information about that health plan, (3) select and (4) use the plan by maximizing the benefits. Let's dig in!
The Ish "They" Don't Tell You
A common mistake people make is choosing a physician/hospital for services and not learning, until it's too late, that the provider (physician/hospital) is not considered as in-network with their insurance plan. YIKES! Can you imagine, or recall a time when something like that happened to you? It's not very fun getting a bill for more than what you expected. Terms like in-network (INN) and out-of-network (OON) play a huge role in the health insurance world. Choosing an INN/OON provider can have a major impact on how your benefits will apply and what your patient responsibility will end up being. Let's learn more.
In-Network (INN): With insurance companies, you will find there are plans that have a network of "preferred" providers (doctors/hospitals). This means these providers have signed a contract and agree to charge patients what the insurance says is allowed. Oftentimes this means the patient will have a lower cost. When using INN providers, you have higher benefits that will apply in comparison to providers who are not INN.
It is the patient's (YOU) responsibility to confirm the network status of his/her provider. I know, I know you're probably thinking "I pay too much money for that, they should just tell me!" Probably, but it is what it is. So, it is always important to confirm with your health insurance provider who is INN for your plan.
***With In and Out of Network benefits, there are times when your deductible amounts will be different for both. The INN deductible is always lower than OON, or sometimes it's the same, but a higher amount will be paid by your insurance plan toward INN services.***
Example: INN your deductible could be $1500 - plan pays 80% after the deductible is met.
OON your deductible is $2500 - plan pays 60% after the deductible is met.
This is why using a provider that is INN is beneficial.** *
Out-of-Network: the total opposite of INN. Providers who are OON, generally charge you more and because they do not have a contractual agreement with insurance companies, there's not much you can do except run them their money (pay what is due)! Usually for OON services, the benefits are lower and your out-of-pocket costs are higher.
One other thing I want to mention is sometimes when you see a provider who is OON, and you ask "do you take my insurance?" they may answer with "we accept all insurances." This does not mean the same thing as being "contracted" with an insurance company, nor does it confirm this provider is considered as INN for your plan. ALWAYS double check!
One thing I cannot stand is when someone throws an abbreviation at me, with the expectation that I know what he/she is talking about. In today's society, it seems that's all we do is communicate with abbreviations "idk..wth..af.." (hit me in private if you need the definitions of those). Don't get me wrong, some of these I use, I mean, you've seen them in my previous posts here and there, but I always do my best to explain and not assume you know what I'm talking about. However, when it comes to abbreviations that are used in the health insurance world, these abbreviations can get a little complicated, so let me help!
There are some insurance plans that offer financial accounts to help with payment for medical expenses and sometimes dental and vision, depending on the account. These accounts have different meanings, and you may find that your plan is eligible to have one of them. Health literacy really comes in handy here because with research, you can determine what financial account is available and if it is any benefit to your or not. I always think about the long run, which is why I contribute quite a bit to one of the three accounts we are about to discuss.
**One thing I want to make clear is that these accounts are not for every day personal use. For example, you cannot use these funds to pay for groceries, get gas because you're on E, buy a TV sold during black Friday, or purchase a candy bar. That's when penalties will come knocking on your door.**
It may be easier to provide a visual with bullet points to show the benefits of each spending account. So, here you go!
Health Savings Account (HSA): this is a savings account that can be used for medical, dental, and vision services, as well as paying for prescriptions. You contribute money to this account and sometimes your employer may be kind enough to match what you put in. The funds in this account are pre-taxed and can earn interest. This account can be available through an employer or through a private insurance. This account comes with a visa/mastercard that you use when paying for services.
You'd be surprised how handy the funds in this account can be, especially for unexpected medical services may occur and it's not your "pay week." If you rarely have medical expenses, it's good to have this account and "watch the money pile up" for later in life. Another thing I like about the HSA is that this money is MINE, which means when I leave a company, I can still use the funds contributed to this account. #benefits
Health Reimbursement Account (HRA): financial contributions to this account can come from the Employer only. The funds in this account can be used for medical services and to pay for prescription drugs. The money is also pre-taxed and has a fixed limit to how much can go into the account each year. This money can roll over and be used for the next plan year. However, if you leave the employer, you no longer have access to the funds.
This account may/may not come with a visa/mastercard. If there is no card associated with your HRA then you will have to fill out a claim form and submit it to the insurance company for reimbursement out of this account.
Flexible Spending Account (FSA): this account can be used to pay for eligible services such as medical, dental and vision. You may also see accounts set up to cover daycare and tons of other things. I will provide a link later on to learn more about that. The financial contributions to this account can be made by you/your employer. Funds in this account are also pre-taxed dollars.
Your employer decides how carryover balances into the next plan year will be handled.
There are two options:
1.There is a limit to how much of your funds can carry over to the next plan year, which is $500. Any amount over that $500, you lose. That whole "use it or lose it" quote is real when it comes to an FSA.
2. You get 2.5 months after the end of the plan year to use funds in the account or you...lose it
The More You Know
So, we learned a lot today, but the biggest takeaway I want you to have is DO YOUR RESEARCH. There's nobody out here who will hold your hand the whole way through. In this this thing called ADULTING, we have to do the work ourselves, since being responsible is rule number one. We can always ask for help, but it is our responsibility to do the bulk of the work as it pertains to any aspect of our lives. For more information about the spending accounts, click here.
In the meantime in between time, be sure to follow me on Instagram: @gero_what or the Gero-what Facebook Page. Don't be shy, leave a comment and let me know what your experience with finding a provider in the network has been like. Tune in for Part Three on next week!