If it weren't for health insurance, thousands, if not millions, of Americans would risk going bankrupt in the process of tending to their health. (The sad reality is that many do go bankrupt, in fact.) But having an insurance plan isn't enough; it's also important to understand how that plan works and what its coverage costs.
Unfortunately, Americans seem to be falling down in this regard. An estimated 49% of U.S. consumers don't know what their copayments look like under their insurance plans, according to HSA Bank. Meanwhile, 53% don't know what deductible they're required to meet before their insurers start paying for health services, and only 45% know what their monthly premium costs.
Having a handle on these figures, however, can help you better manage your money and avoid getting stuck with expensive bills you might struggle to pay off. If you're in the dark about your health insurance costs, it's time to get schooled -- before you get hurt financially.
Know your costs
Budgeting for healthcare is a practice everyone should uphold, but to do so effectively, you need to know what your out-of-pocket costs look like under your health plan. If, for example, you're subject to a $1,500 deductible but aren't aware of that fact, you could get slapped with a hefty medical bill for undergoing a procedure or diagnostic test.
Similarly, understanding what your various copayments look like could help you better prepare for the costs you'll face from month to month. Think about it: If your kids tend to visit the pediatrician 10 times a year each, shelling out $20 per visit is very different from paying $40 per visit.
The good news? All of this vital information is available to you, either online or in the form of physical documentation. If you get health insurance through work, for example, then your employer most likely provided you with a summary of your costs when you signed up during open enrollment. If you're missing that information, a simple call to your HR department could put it right in your hands. There's also the option to call the number on the back of your insurance card and ask an agent to walk you through those numbers.
Either way, understanding what costs your insurance plan subjects you to can help you better budget for healthcare and, in some cases, make smart decisions about managing your health as well as your money. For example, if you have a costly deductible, you might put off a non-urgent appointment until you're able to save for it, rather than charge that expense on a credit card and pay it off over time. And if your out-of-pocket costs are high under your plan, you might shop around for a different one that's more affordable on a whole. If you're going to do that, though, keep in mind that the amount you pay for your premiums may not represent their entire cost. If you get health insurance through work, chances are, your employer subsidizes those premiums to some degree.
Another thing you should know is that if you have a high deductible plan (defined as a $1,350 deductible for individual coverage, or $2,700 for family coverage), you may be eligible to open a health savings account, or HSA. With an HSA, you can contribute and then invest tax-free dollars to cover medical costs. It also pays to see if your employer offers a flexible spending account, or FSA, which allows you to contribute tax-free money to cover qualified expenses like prescriptions, medical supplies, and the copayments you fork over each time you visit the doctor.