Monday, October 26, 2020

Health Insurance Open Enrollment

Every year, we have an open enrollment for health insurance. There are many terms need to be understood, so I put them together for the reference.


A deductible is a set dollar amount you must pay before the insurance company begins paying for medical expense.


A fixed percentage of the charges an insured (you) must pay for a medical service after the deductible is satisfied.


A charge expressed as a fixed dollar amount, you must pay to a preferred provider at the time covered services are rendered.

Out-of-Pocket Max

This is the maximum amount a health insurance policyholder (you) will pay for covered healthcare over the course of a policy year. The out-of-pocket limit, also called the out-of-pocket maximum, helps the policyholder control risk by placing a cap on the most they could spend.


PPO stands for preferred provider organization. PPOs got this name because they have lists of health care providers they prefer you get your health care from. If you get your health care from these preferred providers, you pay less. PPOs are a type of managed care health insurance plan like their distant cousins, HMOs. 


An HMO, or Health Maintenance Organization, is a type of health plan that offers a local network of doctors and hospitals for you to choose from. It usually has lower monthly premiums than a PPO or an EPO health plan. An HMO may be right for you if you’re comfortable choosing a primary care provider (PCP) to coordinate your health care and are willing to pay a higher deductible to get a lower monthly health insurance premium. 


A high-deductible health plan (HDHP) is a health insurance plan with a high minimum deductible for medical expenses. A deductible is the portion of an insurance claim that the insured pays out of pocket. Once an individual has paid that portion of a claim, the insurance company will cover the other portion, as specified in the contract.


A health savings account (HSA) combines high deductible health insurance (HDHP) with a tax-favored savings account. Money in the savings account can help pay the deductible. Once the deductible is met, the insurance starts paying. An eligible individual is one who has a qualified HDHP, has no other health coverage, is not enrolled in Medicare, and is not dependent on someone else’s tax return.

Health Care FSA

The flexible spending account (FSA) is a type of account that allows employees to contribute tax-free money to it for certain expenses. You can use the money in the account to pay for many different qualified medical expenses. For example, you might choose to use the money in the account to pay for your deductible or co-pays when you visit the doctor. You can also use the money to pay for prescription or over-the-counter drugs.

Dependent-care FSA

Dependent-care flexible spending accounts let employees use tax-exempt funds to pay for childcare expenses they incur while at work. Employees can also use FSAs to cover care expenses for qualifying dependent adults who live in their home, including spouses and parents.


A limited purpose FSA is a more restrictive version of a standard health flexible spending account (FSA). Unlike a standard FSA, employees may use an LPFSA in conjunction with a Health Savings Account (HSA). It covers eligible dental, orthodontia and vision expenses only.

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