Health Insurance Terms
The healthcare system is expensive, confusing, and often difficult to navigate. Even if you have good insurance, many people struggle to understand their coverage and maximize their benefits.
Start Health was created to change that. We make healthcare more affordable by offering lower premiums, reducing medical costs, providing price transparency, and helping members save for future expenses.
First, let’s define some important health insurance terms you’ll need to understand.
Premium
A premium is the fee you pay each month to receive coverage.
Health insurance companies determine the price of premiums based on how much they think it will cost to cover your claims. For example, if you’re older or have a history of serious health conditions or risky behaviors like tobacco use, a health insurance company will charge a higher premium because they know the likelihood of you needing frequent or expensive care is higher.
Another factor that influences premium pricing is your deductible.
Deductible
Your deductible is the amount you’re responsible to pay before your insurance kicks in to cover medical expenses.
You might intuitively think a low deductible plan is better than a high deductible plan. If your deductible is low, your health insurance will kick in sooner to cover costs. But, if you’re generally healthy, a high-deductible plan will likely be a better option for you. Why? Because the higher your deductible is, the lower your monthly premium will be. In other words, you can trade higher variable costs (things you might have to pay for) for lower fixed costs (things you’ll have to pay for whether you use your coverage or not).
High-deductible plans are also a requirement for you to be able to contribute to an HSA.
Health Savings Account (HSA)
Your HSA is an account you can use to save for future medical expenses. HSAs are the only triple-tax-advantaged investment vehicle currently available. That means, unlike IRAs, 401Ks, or other investment accounts, you won’t get tax penalties for pulling money out when you need it. Contributions, withdrawals for qualified medical expenses, and investment growth in a Health Savings Account are all tax deductible.
Another benefit of HSAs over other similar accounts is that the money stays with you wherever you go. There’s no use-it-or-lose it policy. So, even if you need to switch to a different insurance carrier, change jobs, or make other life changes, the money you’ve saved in your HSA will be available for you to use when you need it.
We encourage all Start Health members to contribute as much as possible to their HSA. Why? Traditional insurance works by charging policy holders high premiums to cover medical costs. If you don’t have expensive healthcare needs, the insurance company keeps all the money you paid to them in premiums. Start Health is designed to help you keep more of your money in your own pocket. We’ll all need to pay for medical care at some point in our lives. We want you to prepare for that time and pay yourself instead of paying a big health insurance company.
