Understanding [[health insurance]] and Employee Benefits

Health insurance is one of the most valuable—and confusing—benefits you'll receive. A single medical emergency can cost tens of thousands of dollars. Understanding your options isn't just about saving money; it's about protecting your financial future.

Why Health Insurance Matters Financially

The Financial Stakes:

• Average hospital stay: $10,000-15,000+
• Emergency room visit: $1,500-3,000+
• Appendectomy: $10,000-35,000
• Heart attack treatment: $50,000-200,000+
• Cancer treatment: $100,000+ per year

Without insurance, these costs come directly out of your pocket.

Health Insurance Basics

Key Terms You Must Know

How Insurance Actually Works

Example: You have a $1,500 deductible, 20% coinsurance, $6,000 out-of-pocket max

You break your leg. Total bill: $15,000.

If your costs continue and hit $6,000 total, insurance pays 100% of everything after.

Types of Health Insurance Plans

HMO (Health Maintenance Organization)

How it works: You choose a primary care physician (PCP) who coordinates all your care.

Pros:

• Lower premiums
• Lower out-of-pocket costs
• Predictable copays

Cons:

• Need referrals to see specialists
• Must stay in-network (except emergencies)
• Less flexibility

Best for: People who don't mind a smaller network and want lower costs.

PPO (Preferred Provider Organization)

How it works: You can see any doctor without referrals.

Pros:

• No referrals needed
• Can see out-of-network doctors
• More flexibility

Cons:

• Higher premiums
• Higher out-of-pocket costs
• Out-of-network is expensive

Best for: People who want flexibility and don't mind paying more.

HDHP (High-Deductible Health Plan)

How it works: Lower premiums but higher deductible. Often paired with HSA.

Pros:

• Lowest premiums
• HSA-eligible (triple tax advantage)
• Good for healthy people

Cons:

• High deductible before coverage ($1,600+ individual, $3,200+ family for 2024)
• More financial risk
• May avoid care due to cost

Best for: Healthy people who rarely use healthcare and want to build HSA savings.

EPO (Exclusive Provider Organization)

How it works: Like PPO but no out-of-network coverage.

Pros:

• No referrals needed
• Lower premiums than PPO
• Predictable costs

Cons:

• No out-of-network coverage
• Must stay in network

Best for: People who want PPO flexibility with lower costs.

Choosing the Right Plan

The True Cost Comparison

Scenario: You expect moderate healthcare use

The "expensive" PPO might actually cost less!

Questions to Ask When Choosing:

1. How much healthcare do I use?

   • Rarely go to doctor? HDHP might work.
   • Ongoing conditions? Lower deductible better.

2. Are my doctors in-network?

   • Check before enrolling.
   • Specialists especially important.

3. Am I planning major expenses?

   • Having a baby? Surgery planned?
   • Choose lower deductible that year.

4. Can I handle the deductible?

   • HDHP only works if you can pay $3,000+ if needed.
   • Don't choose high deductible if it would strain you.

5. Do I want an HSA?

   • Only available with HDHP.
   • Amazing tax benefits.

Understanding Your Explanation of Benefits (EOB)

After any medical service, you'll receive an EOB. Learn to read it:

Key Sections:

Maximizing Employer Benefits

Open Enrollment Strategy

Before Open Enrollment:

1. Review last year's medical expenses
2. Check if your doctors are still in-network
3. Anticipate next year's needs (baby? surgery?)
4. Calculate total costs for each plan option
5. Consider FSA/HSA contributions

Beyond Health Insurance

Your employer likely offers other valuable benefits:

Common Benefits to Evaluate:

Don't Leave Money on the Table

What to Do Without Employer Coverage

Marketplace (Healthcare.gov)

The Affordable Care Act marketplace:

Enrollment: November 1 - January 15 (varies by state) Subsidies: Based on income; many qualify for help Plans: Bronze, Silver, Gold, Platinum tiers

Income-Based Subsidies (2024):

Other Options

COBRA: Continue employer coverage (expensive—you pay full cost + 2%) Spouse's Plan: Often best option if available Medicaid: Free/low-cost for low-income individuals Short-Term Plans: Cheaper but limited coverage (avoid if possible) Health Sharing Ministries: Not insurance but alternative (research carefully)

Dealing with Medical Bills

Before Treatment:

• Ask for cost estimates
• Verify in-network status
• Get pre-authorization if required

After Treatment:

1. Wait for EOB - Don't pay until you receive it
2. Review for errors - 30-40% of medical bills have mistakes
3. Negotiate - Ask for payment plans or discounts
4. Check for financial assistance - Many hospitals have programs
5. Never put on credit card - Medical bills usually have 0% interest

Common Health Insurance Mistakes

Preventive Care: Free Money

Under ACA, these services are 100% covered (no deductible):

• Annual physical exam
• Immunizations/vaccines
• Cancer screenings (mammogram, colonoscopy)
• Blood pressure, cholesterol, diabetes screening
• Women's preventive services
• Well-child visits

Use these—they're included in your premium!

Action Steps

The Bottom Line

Health insurance is confusing by design, but understanding the basics protects both your health and your wealth. Choose plans based on total expected cost, not just premium. Use preventive care that's included. Never pay a medical bill without checking your EOB first. And always, always evaluate all your employer benefits—there's often free money you're leaving on the table.