Buzz
How much are you actually spending on health insurance? If you only account for the monthly premiums, you're missing a significant portion of your overall costs.
Currently, for instance, I have a Bronze plan under the Affordable Care Act with a monthly premium of $442.83 and a $6,200 deductible.
This means I could end up paying up to $11,513.96—combining the $6,200 deductible and $5,313.96 in premiums—before my insurance starts covering my healthcare expenses.
I could end up paying less if I don’t have many medical expenses or if my adjusted gross income qualifies me for a health insurance premium subsidy.
However, in theory, I could end up paying the full $11,513.96.
In fact, it’s possible that I could pay as much as $12,063.96—that’s $5,313.96 in premiums combined with my $6,750 out-of-pocket maximum. Keep in mind that even after meeting your deductible, you're still responsible for some healthcare costs. It only means that your insurance will start covering a portion of your healthcare expenses, excluding coinsurance or copays, until you reach your out-of-pocket maximum.
After that, theoretically, you’ve paid all necessary costs, and the insurance will cover the rest.
Unless, of course, you visit an out-of-network doctor, or an out-of-network doctor treats you at an in-network hospital, or you receive any other type of health, vision, or dental care not covered by your insurance plan.
While many people won’t reach their out-of-pocket maximum, it’s still important to calculate all the potential costs for in-network health insurance coverage, especially if you’re comparing different plans. (Zachary Tracer, over at Business Insider, wrote a great article detailing how he did this and how it helped him find the best plan for his health and financial needs.)
It’s also a good idea to think about whether you want to enroll in a plan that includes a Health Savings Account (HSA). With an HSA, you can contribute pre-tax dollars towards healthcare expenses and, if you choose, invest those funds in the stock market. Any unused HSA funds can be saved for retirement, as long as they remain in the account by the time you turn 65.
So, how much would your health insurance cost if you hit your out-of-pocket maximum? Could you cover those costs? My current HSA balance is $4,036.49, so I’d need to tap into my emergency fund to meet the $6,750 out-of-pocket maximum. And yes, I know I’m fortunate to have both HSA savings and an emergency fund.
What about you?
