Are you shopping for a new California health insurance plan? Well, we hope you have been using our comprehensive yet easy-to-understand California Health Insurance 101 section of the Vitality website as a handy resource during this process but just in case, let’s review the case of a 26-year old who is shopping for their first California health insurance plan and would like to know what all these different plan components and terms mean…

Let’s assume I’m 26. I am no longer on my parents’ health insurance plan as I am older than the guidelines set forth by recent Health Care Reform legislation. I’m young; I’m healthy; I work out regularly, take care to watch my diet, and I don’t take any medications. I’ve just started out on my career path and work as a freelance graphics designer. I am making the best money of my life but my monthly budget is still ‘tight’. I’m basically on the lookout for an affordable California health insurance plan that is going to protect me if something significant happens to me in the form of illness or injury….So: What’s my best strategy here?

Well if this 26 year old spoke with a Vitality team member, we’d suggest a good, long look at the advantages offered by a HSA-compatible high deductible health plan. The Health Savings Account-compatible plan has three key advantages for a young person:

• Monthly premiums are typically lower. The high deductible health plan with its lower monthly premium may be just the strategy for a young, healthy adult who is basically on the lookout for  catastrophic health plan coverage in the event that a major medical event should occur in that person’s life.
• While many people who own a HSA-compatible health plan don’t actually fund their HSA (and it is not mandatory), it is certainly in the plan owner’s best interests to do so. Your contributions are tax deductible and the money in your HSA accumulates tax-free. If you’re young and healthy there’s even more reason to save money in your HSA: If you’re not spending money on qualified medical expenses, your HSA funds are growing –  tax free – towards a point in the future when you may have medical issues that do require payment on your part. Think of it as a tax free rainy day fund for your health and financial wellbeing.
• Having money in your HSA gives you a great sense of empowerment: You have the money but you don’t have to spend it. You can use other ‘out-of-pocket’ money to pay for medical expenses if you’d like and you can keep saving those HSA funds towards a future point in time when you do want to spend that money as there is no ‘use it or lose it’ feature attached to a HSA!

(Oh and before we go on: In the theoretical example we’re discussing in this article, there is no maternity coverage attached to this plan. If you’re thinking of becoming pregnant it is vitally important that you secure maternity coverage before you become pregnant.)

Okay – let’s assume you’ve decided that the HSA-compatible health plan is the way to go. What should I be looking at as a California health insurance consumer?

• First, we recommend that you look at the network strength of the insurance carrier whose plan you are considering buying. Why? Well if you pick a plan based entirely on the price of the monthly premium and end up with a weak provider network in your community, you’ll find yourself using more out-of-network providers and paying higher out-of-network charges. That is an almost certain way to end up paying a lot more for your annual medical coverage!
• Next we look at our annual deductible: Here you may have a choice. Is it $3500, $4000, $5200? If you choose a lower annual deductible the insurance company will step in and start paying for your medical expenses that much sooner, but you will pay a higher monthly premium. Pick a higher annual deductible and you pay a lower monthly premium…
• Here’s an interesting and important ‘Did you know?’: There are HSA-compatible plans that will pay for 100% of your covered medical services after you meet your annual deductible. So let’s say you have already met your annual deductible of $4000 and you then break a leg skiing in Mammoth. Your subsequent medical charges for that accident were $18,000. The $18,000 is the responsibility of the insurance company, not yours. Rest easy with that HSA-compatible plan!
• Does your HSA plan have a combined medical/pharmacy deductible? In other words: Is every dollar you spend on prescription drugs applied towards meeting your annual deductible or do you have another deductible that has to be met for your prescription drug purchases that is separate and apart from your medical deductible? (If separate, here’s an area where you want to make note of your plan’s annual out-of-pocket maximum.)
• Finally, you’ll want to check out what kind of preventive care exam program is offered by your plan? Preventive care exams that are paid for by your insurance company before you meet your annual deductible are important as are mammogram and GYN screening, so this is another area you’ll want to consider in selecting the HSA-compatible health plan strategy that is uniquely right for you!

We trust that the above has given you a good starting point in helping you understand the various considerations that go into selecting a California health insurance plan. We recognize that individual health plans in California tend to have lots of ‘moving parts’ and that the review and shopping process can get frustrating. That’s where we come in: You can rely on your Vitality health insurance professional to break all this down into a simple, easy-to-understand, process that helps you feel comfortable and confident in selecting the plan that’s right for you. An added bonus when you work with Vitality? As an independent authorized agency representing an array of CA health plans from insurance companies here in the state, our services and careful, considerate consultation are always 100% free to you and your family. Always. Count on it and count on Vitality!