Health Insurance
Health insurance is critical for protecting both your health and your finances. Understanding plan types, coverage levels, and tax-advantaged accounts like HSAs can save you thousands of dollars each year.
Essential Health Benefits
ACA-compliant plans cover preventive services at no cost: annual physicals, vaccinations, screenings, and wellness visits.
Covers inpatient hospital stays including surgery, intensive care, and overnight stays.
Plans use a tiered formulary (generic, preferred brand, non-preferred, specialty) with varying copays for each tier.
Federal parity laws require most plans to cover mental health and substance abuse treatment at the same level as physical health services.
Covers emergency room visits and ambulance services. Plans cannot charge more for out-of-network emergency care.
ACA plans must cover prenatal care, labor and delivery, and newborn care as essential health benefits.
Choosing the Right Plan Type
There are four main metal tiers under the ACA: Bronze (lowest premium, highest deductible), Silver (moderate premium and deductible, eligible for cost-sharing reductions), Gold (higher premium, lower deductible), and Platinum (highest premium, lowest out-of-pocket costs). If you expect frequent medical visits or have a chronic condition, a Gold or Platinum plan may save you money overall despite the higher premium. If you are young and healthy, a Bronze or Silver HDHP with an HSA can be the most cost-effective choice.
Money-Saving Tips
- If you are generally healthy, consider a High Deductible Health Plan (HDHP) paired with a Health Savings Account (HSA) for triple tax advantages.
- HSA contributions are tax-deductible, grow tax-free, and withdrawals for medical expenses are tax-free. Max out your HSA every year.
- Always use in-network providers. Out-of-network costs can be 2-5x higher and may not count toward your deductible or out-of-pocket max.
- Review your plan's formulary before open enrollment. If your medications are not covered, factor the out-of-pocket cost into your plan comparison.
- Take advantage of all free preventive care. Catching problems early saves money and protects your health.
- Compare total annual costs (premiums + expected deductibles + copays), not just the monthly premium.
Common Mistakes to Avoid
- Choosing a plan based only on the lowest monthly premium without considering the deductible and out-of-pocket maximum.
- Not checking whether your doctors and preferred hospitals are in-network before enrolling.
- Missing the open enrollment period. Outside of open enrollment, you can only sign up during a Special Enrollment Period triggered by qualifying life events.
- Failing to use an HSA or FSA to pay for medical expenses with pre-tax dollars.
Key Terms to Know
The monthly amount you pay for your health insurance plan, regardless of whether you use medical services.
The amount you pay out of pocket for covered services before your insurance starts paying.
A fixed dollar amount you pay for a specific service (e.g. $30 for a doctor visit) after meeting your deductible.
The most you will pay in a year for covered services. After reaching this limit, insurance covers 100% of covered costs.
A tax-advantaged savings account paired with an HDHP for medical expenses. Contributions, growth, and qualified withdrawals are all tax-free.
HMOs require referrals and in-network care. PPOs offer more flexibility to see specialists and out-of-network providers, at a higher cost.