Stantec Consulting Services Inc.

Copay, Coinsurance, Deductible, Premium… so many syllables! What do these words even mean?

Jargon is the worst. Let’s put this in real English for you:

• Premium. Your  premium is like rent: it’s the amount you pay for your health insurance every month. 

• Copay. Your copay is the amount of money ($20, for example) you pay for any doctor visit or healthcare service covered by your insurance. 

• Deductible. Your deductible is just the amount of money you’ll pay towards doctor visits and other healthcare services yourself, before your insurance plan starts to pay. Plans have different deductibles. You “meet” your deductible when you have spent that amount on healthcare services.

• Coinsurance. Coinsurance is the percent of costs of doctor visits and other healthcare services you’ll pay after you’ve reached your deductible and your insurance plan has started to pay.
  
  It’s a lot. Here’s an example. Say you get a $3000 medical bill.
  Your plan has a deductible of $2000 and coinsurance of 20%.
  You’ll pay $2000 (“meeting” your deductible), and have $1000 still left to pay.
  Of that $1000, you’ll pay 20% and insurance will pay 80%.
  Your final total: $2200. 
  $2000 deductible + $200 coinsurance (20% of $1000 =$200).

Unfortunately, it’s not just about the lowest monthly costs, or even lowest deductibles. Best guesses are your best bet. Jot down anything you can think of you might need in the upcoming year or any changes you anticipate. Here are some helpful questions:

• Do you imagine next year will be about the same as last year as far as your healthcare needs?  
• Do you have any anticipated large medical expenses in the next plan year, such as surgery, pregnancy, or chronic conditions that require many appointments/tests? (If you have conditions you need to manage or high cost medical expenses, a PPO/ HMO may be more cost effective in the long run.)
• Or are you healthy and engaging mostly with preventive care? (Then you might consider a High Deductible Healthcare Plan, or HDHP.)
• Are there screenings or vaccinations that are now recommended for you?

Honest answer, it could take a few calls. But it’s worth the time, including any time spent on hold, to get the right answer. Call your doctor’s office or your health insurance company. They can check and confirm first-hand whether or not your doctor will still be in-network. We suggest calling again at the beginning of the year. It’s rare, but sometimes things change and doctors change which healthcare insurance they accept at the last minute. 

Healthcare spending accounts  are a great way to save money on medical expenses. There are three types, explained below. In two of them, you choose a set amount to deduct from your paycheck every month, pre-tax. The third is a fund that your employer puts money into on your behalf. 

In all three, the money in these accounts is not taxed, which means that if you pay for expenses using these accounts, you save around 30%.You can use this money to pay for copays, deductibles, and other medical expenses. You can also use it for vision expenses, sunscreen, bandaids, pain relievers and more. Many online-retailers have special HSA and FSA ‘stores’.

Here are the three types, with some of their pluses and minuses:

• Health Savings Plan (HSA): A savings account that you own. 

You decide how much to put into the plan every month, and that money goes into the savings account, tax-free. You can deduct these HSA contributions on your taxes. Employers can also contribute to your HSA. Rules for what you can spend it on can be complicated and they are only available if you have a high deductible health plan (HDHP). The money rolls over from year to year and if you leave, you keep the account.

• Flexible Spending Account (FSA): A savings plan owned by your employer. 

An FSA is like an HSA: you decide how much to put into the account, the money goes in tax free, and your employer can also contribute to the FSA. But you cannot deduct this money from your taxes. On the plus side, the account can be used for many types of health insurance plans, not just a high deductible account that an HSA. If there’s unused money at the end of the year, you can: 1) Get 2.5 more months to spend the left over money, or 2) Carry over up to $615 to spend the following year. 

• Health Reimbursement Account (HRA): An account funded by your  employer, on your behalf.

With this one, money is not deducted from your paycheck. Your employer chooses which medical expenses the money can be used for and reimburses you with tax-free dollars for those expenses. Unused amounts can be rolled over to use the next year. You lose any money in the account if you leave the company.