Health Insurance: An Overview [Issue No. 4]

Happy Weekend from Team YMP! 😎

We’re soaking in these long summer days on the East Coast and processing our thoughts on the 2020 elections (including local ones). We’re focused on the issues, but we can’t help feeling emotional over the growing number of minority women in rooms of power. We’ve seen firsthand in our corporate male-dominated offices how diversity helps reveal blind spots and biases for the better.

Our intern Josephine finished her summer at YMP. She created this great resource list on mental health, and asked us HSA questions that led to our topic today!

What’s on Our Mind: Healthcare is a Headache 🩺

We didn’t even consider healthcare until we got bumped off our parents’ plan. Most of us start paying for our own health coverage at age 22 - 25, because <age 26 is the cut off to quality for dependent child coverage.

Recently, we refreshed on our own understanding of healthcare because, well, COVID. The details can be yawn-inducing, but we need you to pay attention for this one!

(1) Healthcare insurance means you don’t run into $$$ bills completely alone.

Health insurance is society’s way to collectively share and protect individuals from health risks and outrageous bills. While it doesn’t fix everything, it removes some of the uncertainty and risk around rising healthcare costs.

(2) You may feel overwhelmed by health insurance options and that’s normal.

In the U.S., there are three main types:

1. Company-sponsored plans
2. Government-sponsored plans (Medicaid = low income, Medicare = elderly)
3. Private market insurance (typically more expensive, but for people who don’t fall into the first two plans)

Company-Sponsored Insurance: Available to employees and family members. You still have to pay for insurance through a deduction from your paycheck, but your employer chips in and negotiates a group rate. Company plans tend to be cheaper than private insurance.

There are a few ways to hook up company-sponsored insurance:

1. Employee
2. Spouse / domestic partner of employee
3. Employee’s dependent child under age 26

Non-Company Options: Government plans vary heavily by state and change frequently, so we recommend checking healthcare.gov directly. For younger people, the options are Medicaid (low-income or unemployed individuals) or private insurance.

For today, we’ll be focusing on employer-sponsored plans, but hope to cover Medicare later in our newsletter series!

(3) No one size fits all, so research your health options specifically.

We mean it — visit your employer’s benefits page. Generalized information is useless unless you can see how it applies to your company’s options and price points. Consider your company’s benefits information a field guide. Every time you change companies or health plans, you’ll want to re-evaluate too.

The most common options for corporations are high and low deductible plans.

High Deductible Health Plans (HDHPs): Low monthly “membership” cost and eligible for HSAs, but higher potential out-of-pocket costs.

Health Savings Account (HSA): Both a healthcare emergency fund and a long-term tax-advantaged investment vehicle.

• HSAs have three major tax benefits. You can fund your HSA with pre-tax income and invest that money tax-free until you choose to spend on health expenses (tax-free). Once you hit the age of 65, you can spend HSA money on other non-healthcare expenses (taxed but without penalty).
• Although CA and NJ do not deduct HSA contributions from state taxes, you still get the federal tax deduction and all the other benefits of HSAs!

Low Deductible Health Plans: Higher monthly “membership” cost, lower potential out-of-pocket costs

• Usually no HSA but your company may offer a Flexible Spending Account (FSA) which you can use for health expenses within the year.
• Different industries have different types of low-deductible plans so you should learn specifically about yours.

(4) There’s no right choice because you can’t predict the future, but understand the trade-offs.

Understand the coverage for your specific needs, including mental health, physical therapy or health conditions. This may involve a phone call to the insurance hotline which will be annoying but save you money and headaches in six months.

Most young, healthy individuals can opt for the HDHP plan to save money and max out the HSA as an investment vehicle. However, HDHPs come with higher risk of unexpected costs if you do break a leg or require more healthcare that year.

We truly emphasize reading your company’s specific plan! They vary significantly. Some package dental and vision together, whereas others offer these separately. Read thoroughly and Google terms you don’t understand.

(5) If you’re still lost, phone a friend! 📞

Healthcare can be confusing, but someone around you probably has learned these lessons the hard way. Ask your family if you feel overwhelmed by the words on Google. Call the insurance hotline or even a savvy coworker.

No pressure if you aren’t sure you made the right choice; you can change your mind next year.

Healthcare Terms to Know

• Out of Pocket: The amount you have to pay by yourself. Some plans have “out-of-pocket maximums” which put a ceiling on your healthcare costs at least within covered services.
• Deductible: Amount you pay out-of-pocket before your insurance plan starts to pay. For example, if your health plan has a $2,000 deductible, you pay the first $2,000 of covered services yourself and your insurance pays anything above that.
• Health Insurance Premium: Monthly / annual “membership” fee you pay to have health insurance. For employer plans, this amount will come out of your paycheck each month.
• Copay: The set amount you pay for a doctor’s visit or service. This is called a copay because your insurance covers the rest of the actual cost.

Next week, we’ll cover a few best-practices for Employer-Sponsored Plan HSAs and FSAs, which are great money-saving tax benefits that help offset healthcare costs!

What We’re Reading: Healthcare Edition 📖

• Michelle Obama talks about menopause in a way we’ve never heard from high-powered women. We’ve seen more women share the dirty details of pregnancy, miscarriages and work balance — all topics we’ll eventually have to deal with past our twenties.
• LA mayor cut off power for Tik Tok stars’ mansion due to partying during COVID.
• Minorities are disproportionately impacted from COVID-19, even at a younger age.
• Congress still hasn’t finished negotiating the next stimulus package, which is now expected to pass in late September.