A Recent Grad's Guide to Health Insurance
Job hunting? There is more to consider than just salary. That weekly pay is only part of the total benefits an employer can offer a prospective employee. Adult life brings many responsibilities with it, and health insurance is one of them. Use this helpful guide to healthcare insurance basics as you design your career path and next steps.
Why Make Health Insurance a Priority?
It probably feels like health insurance is low on your list of needs right now, but preventive medicine helps young college grads keep from becoming chronic disease statistics. Despite efforts to curtail the escalation of health care costs for millenials, something unexpected like a broken leg can end up costing thousands of dollars without the right insurance policy.
The Affordable Care Act has also changed the health care landscape for Americans. You may find yourself paying a penalty if you don’t make health insurance a priority.
Getting the Lingo Right
Like most industries, there are key terms you’ll want to learn regarding health insurance. For example, what is “out-of-pocket expense?” This refers to the maximum you pay towards your annual health care. Even if your hospital bill is $40,000, if your policy carries an out-of-pocket limit of $5,000, that’s all you pay. Here are a few more phrases you need to understand:
- Premiums – The amount you must pay towards your health insurance, regardless how often you use it. An employer may pay the full amount or may pay part of it with you responsible for the rest of the premium. This is typically a monthly cost.
- Deductible – This is the amount you’re required to pay out of pocket before the insurance provider picks up the bills. Once you hit your deductible, the insurance benefits kick in. The deductible is a critical factor to consider when selecting your plan. High deductible policies may only cover catastrophic illness. Ideally, if you have a high deductible plan, your employer will offer a health savings account to help cover expenses.
- Health savings account – A tax-advantage plan that helps cover the cost of high deductibles by allowing you to contribute “pre-tax” dollars. Employers may contribute to an employee HSA plans as well. An HSA is only available when offered in conjunction with a high-deductible insurance plan.
- Copay – If part of your plan, this is amount you pay for each medical visit at the time of service.
- Coinsurance – A percentage of the total cost you pay for a health service.
A Guide to Healthcare: Asking the Right Questions
As a millennial, asking smart questions helps you investigate the health offerings of an employer.
- Do you choose a plan or does the employer pick it? Some employers have a menu system for insurance that helps you to pick the policy that best fits your life.
- What is your cost? This includes the premium; copay, coinsurance, deductible and out-of-pocket expense. Ask the employers to break the total costs down for you, so you understand the full spectrum of your financial responsibility.
- Is there a health savings account? A health savings account is an attractive benefit, because you can make pre-tax contributions that go towards future medical problems along with potential contributions from your employer. The downside is that an HSA is only available for use with a high deductible plan — but if you are generally healthy, it might be worth it.
- Can you keep your current medical provider? You may feel more comfortable continuing with the same practitioner.
Health insurance benefits are part of the package employers use to attract the best talent. Exploring the health insurance options is a strategic approach to job hunting, one that offers the brightest future for new grads.