Health Insurance Basics

Health Insurance Premium

Your premium is the amount you pay to have health insurance. This is usually paid every month, whether or not you use your health insurance. Think of it like a membership fee that keeps your coverage active.

Deductible

Your deductible is the amount you have to pay for covered healthcare services before your insurance starts paying its' share.

For example, if your deductible is $2,000, you may have to pay the first $2,000 of your covered medical expenses yourself. After you meet your deductible, your insurance usually begins sharing the costs with you. For example, if you had surgery and it cost $5000, and your co-insurance was 50%. You’d pay the first $2000, then for the remaining balance of $3000, you would pay a 50% coinsurance of $1500. In total you will have paid $2000 (deductible) + $1500 (co-insurance) = $3500, and the insurance carrier will have paid $1500. It is advantageous to have a $0 medical deductible so you get coverage right away. However not all areas offer a plan with a $0 medical deductible.

Most plans with a deductible cover preventive care (1x yearly check up, colonoscopy, mammography, immunizations, etc) and office visits before you meet your deductible. Office visits might include: primary care office visit, specialist office visit, mental health office visit, urgent care office visit, services but not labs, x-rays, ER, hospital, surgery, etc. It is best to check with your plan to determine what may be covered before you meet your deductible.

Copay/Copayment

A copay is a fixed amount you pay for a healthcare service.

Examples:

$25 for a primary care doctor visit
$50 for a specialist visit
$10 for a prescription

Your copay may be due when you receive the service.

Coinsurance

Coinsurance is the percentage of a healthcare bill that you pay after you have met your deductible.

For example, if your plan has 20% coinsurance, your insurance pays 80% of the covered cost and you pay 20%.

If a covered hospital bill is $10,000:

Insurance may pay $8,000
You may pay $2,000

Out-of-Pocket Maximum (Max Out of Pocket)

Your out-of-pocket maximum is not an amount that you are scheduled to pay, rather it is your maximum financial risk on a plan. A max out of pocket is the most you will have to pay for covered healthcare services in a plan year.

Once you reach this limit, your insurance generally pays 100% of covered services for the rest of the plan year.

Generally deductibles, copays and co-insurances count toward your maximum out of pocket. Your monthly premiums, uncovered services, or care from providers outside your plan rules do not count towards your maximum out of pocket.

For example, if your Maximum out of Pocket was $9000 and in January you had a surgery you paid $4000 for, in March you had an ER trip you payed $1500 for, and in April, you had a hospital stay you were billed $8000 for, you would only pay up to $9000 for covered services during the calendar year. Meaning you would pay the $4000 + $1500 + $4500 (of the hospital bill), but the remaining $3500 due for the hospital will be paid by your insurance carrier. Additionally, any covered medical expenses accrued from April to Dec 31 will be covered in full by your insurance carrier.

Network

A network is the group of doctors, hospitals, clinics, and pharmacies that have an agreement with your insurance company.

In-network providers have agreed to lower rates with your insurance company, so you usually pay less.
Out-of-network providers may cost more, and some insurance plans may not cover them at all.

Before making an appointment, it is a good idea to check whether the provider is in your network, or in other words, if they accept your insurance.

What Is an HSA?

A Health Savings Account (HSA) is a personal savings account that allows you to set aside money specifically for qualified healthcare expenses. The money belongs to you and stays with you even if you change jobs, change health plans, or retire.

Who Can Open an HSA?

To contribute to an HSA, you must be enrolled in an HSA-qualified health plan (also called a High Deductible Health Plan or HDHP). Not all Marketplace plans qualify for an HSA, but Bronze do. Please let me know if an HSA eligible plan is something you are interested in.

If you have an HSA-qualified plan, you can open an HSA through a bank, credit union, or other HSA provider. You are responsible for setting up the account—it does not happen automatically when you enroll in your health insurance plan.

What Can HSA Funds Be Used For?

HSA money can be used tax-free for many qualified healthcare expenses, including:

Doctor visits
Prescriptions
Dental care
Vision care (glasses and contacts)
Certain medical supplies and services

You can use your HSA funds for yourself and eligible family members, even if they are not covered on your health plan (as long as they qualify under IRS rules).

Why Use an HSA?

HSAs offer valuable tax advantages:

Contributions may be tax-deductible (or made pre-tax through an employer)
Money grows tax-free
Withdrawals are tax-free when used for qualified medical expenses

An HSA can be a great way to prepare for future healthcare costs while also receiving tax benefits.

If you are interested in an HSA, please let me know when we review your plan options. I can help you identify whether a plan is HSA-qualified and discuss whether it may be a good fit for your situation.

Please Report Life Changes Promptly

It's important to let me know if any of the following happen during the year:

Marriage or divorce
Birth or adoption of a child
Moving to a new address
Loss or gain of other health coverage
Changes to your household size
Significant changes to your estimated annual household income

Most life events must be reported within 60 days in order to make a change to your health plan. For example, adding a spouse or child to your plan can only be done if I submit the change within 60 days of the marriage, birth or adoption. If not done within 60 days, the spouse or child will have to wait to receive marketplace health coverage until January.

Income changes are especially important. Keeping your Marketplace application up to date helps ensure you're receiving the correct premium tax credit during the year and can reduce surprises when you file your federal tax return. Updating your estimated income throughout the year can help minimize any tax credit reconciliation at tax time.

Lastly, you can not eligible for a subsidy (APTC) if you are double enrolled in health coverage. Please let me know if you apply and qualify for Medicaid or a job-based health plan so that I can cancel your Marketplace Health plan. Failure to cancel the plan could result in you paying back the full amount of APTC received during the months you also had other coverage.

What is the Advanced Premium Tax Credit (APTC)?

If you're receiving financial assistance to lower the cost of your monthly premium, you're receiving an Advance Premium Tax Credit (APTC) based on your estimated yearly household income and tax household size.

When you file your federal tax return, the Marketplace compares the estimated income on the Marketplace application with your actual tax household income at tax time.

If you earned less than expected, you may qualify for additional tax credit. For example: You estimated 40k, but you made 20k = you may receive money back at tax time.
If you earned more than expected, you may have to repay some of the tax credit. For example: You estimated 60k, but you made 80k = you may owe money back at tax time.
If your estimated income is similar to your actual tax household income, you will neither owe or receive money back at tax time. For example: You estimated 40k, but you made 43k = you are not likely to owe or receive money at tax time.

The estimated yearly household income used is your Modified Adjusted Gross Income (MAGI). If your health plan is HSA eligible, your taxable income can be lowered by the amount you contribute to your HSA.

If you are married, your estimated yearly household income includes you and your spouse's income, even if your spouse is not on your marketplace health plan.

Additionally, you can only receive APTC (subsidy) for dependents you are claiming on your taxes that year. For example, if you are divorced and claim your children on taxes every other year, your children are only eligible for a subsidy (APTC) on your plan the years you claim them on your taxes (even if they are currently living in your home).

Lastly, you are not eligible for a subsidy if you are double enrolled in health coverage. Please let me know if you apply and qualify for Medicaid or a job-based health plan so that I can cancel your Marketplace Health plan. Failure to cancel the plan could result in you paying back the full amount of APTC received during the months you also had other coverage.

When estimating your income, here are a few things to remember:

-It is your estimated yearly household income, so if you are married, please include your spouse’s income as well (even if they are not on your marketplace plan).

-It is just an estimation. I know it can be hard to estimate when you are self-employed or between jobs. But just do your best guess! And know that I can update your estimated income anytime mid-year. Updating your estimated income mid-year will update the cost of what you pay for your plan (usually lower cost if we change your estimate to be lower, usually higher cost if we change your estimate to be higher). But updating mid-year can help minimize tax credit reconciliation at tax time.

-The income is your MAGI, Modified Adjusted Gross Income. If you are self-employed, this is often your estimated annual income after business expenses– not your total business revenue. For any tax-specific questions, you may want to consult an accountant or a tax professional. All Bronze Plans are HSA eligible, you may also reduce your income by the amount you plan to contribute to an HSA.

At Tax Time- Fill out Form 8962 using form 1095-A

If you received APTC, there is one additional form you must include with your taxes. This form is used to reconcile the tax credit you received with the amount you actually qualified for. The form is called IRS Form 8962, and you use Form 1095-A to fill out this form. You’ll receive Form 1095-A from the Marketplace in January. If you do not receive it, text or email me and I can send it to you as well.

If Form 8962 isn't filed when required, you could lose eligibility for advance premium tax credits in future years until it's completed.

Anyone can apply for Health Insurance during

Open Enrollment Nov 1 - Dec 15.

Open Enrollment is the time that anyone can apply for a marketplace health plan with a January 1st start date. Do you have any friends, family, neighbors, or co-workers that might need help finding a health plan? Just send me their name and number, or share my name and number with them, and I’d be happy to help! Kristine Barnett: 385-528-5895