Making Health Insurance Decisions


What’s up Internet? My name’s Ian Bloom. Welcome to Nerd Finance! I’m your resident financial life planner and huge nerd.

In today’s episode we are going to be covering health insurance. Before I dive in, I wanted to let you know that last year we recorded very detailed videos on each of the different types of health insurance plans and today is just going to be a recap of that. So, if you have questions about a specific type of plan like a high deductible health plan, those videos are available elsewhere on the channel. So make sure to give them a watch.

Making health insurance decisions in open enrollment in general is a lot like creating your character in Skyrim: As it turns out there are a lot of different decisions to be made and a lot of little variables you have to understand in order to get the perfect thing, but most likely you’re just going to hit the confirm button and move on. So, let’s take things off autopilot a little bit and talk about the different types of plans that are available.

The first is a high-deductible health plan. High-deductible health plans are always paired with an HSA and are called HD HP’s. HSA stands for health savings account. HSAs are paired with a high-deductible health plan similar to how Ash Ketchum always has Pikachu on his shoulder, because as it turns out they’re way better together. High-deductible health plans start off with this big deductible that really isn’t that attractive, however even though they have this big deductible you are able to save the money that you need to cover that deductible in the health savings account and that money can be saved pre-tax, and will be taken out tax-free as long as you spend it on medical care. So, it’s a really powerful savings tool. Here’s the trick, in general, high-deductible health plans have much lower premiums than the other policies that are available. So, as a result, the money that you’re saving is usually money that you would have spent on the premiums anyway. It can be used for future years, or for other things than medical care with a penalty, so you get to save your own money and spend it on what you want.

Preferred provider organizations are just what they sound like. There’s an in-network group of doctors and hospitals that you can see with maybe 70 or 80% of your expenses covered. Whereas there are out-of-network groups of doctors and hospitals that you can see where you might get covered for 30 40 or 50% of your costs. Keep that in mind when you’re on a PPO plan. It means that you have an in-network group that you should be seeing more often if you want to be cost-efficient.

Point-of-service plans are very very similar to PPOs in the sense that they start with a P, and in general they have in-network providers that you want to be seeing. However, the back end of a POS plan is a little bit different than the back end of a PPO plan. Instead of just having agreements with the doctors in general, they have specific rates that they will pay up to any particular doctor, regardless of what that doctor or provider charges for their care. So, instead of having it be 70% or 80% of the benefit you may have 100% of your care covered by what they pay out, or you may have 50% covered by what they pay out depending on the procedure and where you go.

Finally, we’ll deal with HMOs, health maintenance organizations. Health maintenance organizations are relatively new because they came about as a result of large urban centers becoming popular. You see, HMOs will only operate typically within a geographic area where they have negotiated care with all of the medical providers in the specific category, in that area. For instance, in my area, Duke is a big hospital and medical facility owner so if Duke were to have an HMO it would say that my coverage covers 90% of costs at Duke hospitals. It’s kind of like pre-paying for your medical care. HMOs do tend to have a pretty high premium, but because they’re limited to geographic areas if you’re in that area your care might be 100% covered. As a result, it can be pretty helpful to have one of these if you live near an urban area. Unfortunately, it does mean that rural viewers will not really have access to good HMOs. You know places like Boston, New York, LA, Raleigh, I guess…will have good HMO coverage.

That was a ton of information. As you can see popping up throughout the video, I do have A Gamer’s Guide to Health Insurance linked in the description if you want to recap of some of these basic things, plus a couple little stats on how the plans size up next to each other. You can also go watch the individualized videos I talked about at the beginning of this video which dive deeper into each type of health insurance. Finally, I hope that you enjoyed the content and that it was helpful for you and I got in just enough nerdiness with the Skyrim and Pokemon jokes. I hope you have a wonderful day thanks so much for watching!

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