Category Archives: Insurance

Health Insurance: Part 1 – Deductibles

This is part 1 of a series on health insurance. I will be explaining several components of health insurance contracts in order to help you make a better decision on your purchase.

Deductibles are a part of health care plans that require you to pay an initial amount before you receive some type of reimbursement. In other words, if you have a $100 deductible, the first $100 is on you and after that your insurance company will reimburse you some or all of your covered payments. Typically, HMOs do not have a deductible although some are starting to have a small one. PPOs typically have some sort of deductible.

If you are considering a PPO, you more than likely have the option to choose your deductible. Typically, the higher the deductible, the lower the cost. This is because you are responsible for a greater amount before the insurance company will have to pay. You should consider your past medical history when choosing your deductible. If you are prone to injury and visit the doctor often, it may not be wise to choose a high deductible because you will have more out-of-pocket. The opposite is true for someone who is very healthy. You may be able to get away with the higher deductible in order to lower your costs.

If you are purchasing a family policy, you typically will also have a family deductible in addition to the individual deductibles. Let’s say for example that you have three family members on your plan. The plan has a $200 individual deductible and a $500 family deductible. If person #1 has an insurance bill of $300, the first $200 is paid in full by person #1 because of the deductible and then the insurance company will pay for part or all of the remaining $100. If person #2 has a $300 bill as well, the same payment structure will apply. If person #3 has a $300 bill, the family deductible applies. Since the already have paid $400 out-of-pocket, only the first $100 of person #3’s bill will be out-of-pocket. The final $200 of their bill will be covered by the insurance company at the appropriate rate.

If you get your health insurance through your employer, you may also have the option of a HSA. I will go over HSAs in a future post but I will give you a quick overview now. An HSA is a health savings account. It is a tax sheltered account that allows you to save pre-tax money for your healthcare bills. As long as you use the money for healthcare expenses, it is tax defered as well as tax-free. These accounts are paired with high-deductible health plans. These plans have higher than normal deductibles. Typically, you should only consider a HSA if you are in good health. Like I mentioned before, I will discuss these in a later post.

HMO vs PPO: And The Winner Is…..

…..whatever works best for your current situation!

With open enrollment coming around the corner, I thought it would be nice to give a brief description of the differences between a Health Maintenance Organization (HMO) and a Preferred Provider Organization (PPO).


First off, a HMO is a prepaid health plan. The doctors that are in the network are already compensated for providing you health care. They get paid regardless. With a HMO you typically choose a primary care physician (PCP). The PCP is the first person that you go to if you are in need of medical care. If you need to see a specialist (such as a dermatologist), you need to go to your PCP first and then they will refer you to a dermatologist in the HMO network. This is one of the nuisances of a HMO that seem to turn people off to them. HMO’s also may have less participating doctors than a PPO. If you like your current doctor and are thinking of switching to a HMO, make sure and ask them if they participate in the HMO. Otherwise you will be stuck searching for a new doctor. Although, HMOs seem more comprehensive, they are typically quite considerably cheaper than their PPO counterparts. I will explain why next.


A PPO is a network of participating doctors that your insurance company has negotiated discounted rates with. As long as you stay within the network of doctors, you pay lower fees, copayments, etc. The thing that makes a PPO different than an HMO is the ability to choose your doctor. If you do not like any of the doctors in the network, you are free to choose an out-of-network doctor. However, doing this means you will pay more out of pocket. You also do not need a referral to see a specialist. These added freedoms also add to the price. The premiums for these plans are typical double or triple the amount of a HMO. These plans also typically have deductibles, larger copayments, etc.

When you are comparing HMOs vs. PPOs, you need to weight all of the costs. Look at your past bills and see what it would have costed you for each plan you are comparing. I hope to have a future post about all of the options in PPOs and HMOs to help you undertand them better. I also want to do a post on health savings accounts (HSAs) since many companies are now moving toward them to cut costs.

Does anyone have any specific questions that they would like addressed in a future post? Any interesting stories about your health insurance? You can leave a comment or send me an e-mail with a question. I love reading them!