There are a wide variety of California health insurance plans available to residents of CA. From a California Health Savings Account (HSA) plan to a California copay plan there are many options from many insurance companies.
Here are a few of the types of California health insurance plans that you will want to investigage along with some of their common features:
1. Copay Plans – These plans are by far the most popular and are what many people are used to having through an employer as a group plan. A copay is designed to pay for certain things (usually Doctor visits and prescriptions) for a flat fee without you, the insured, having to meet the plan deductible.
For example: you go to the Doctor to get an earache checked out and after the checkup the Doctor’s bill comes to $200. Now if you have a California health care plan with copays for Doctor visits of let’s say $35 then all you pay is the $35 for the Doctor’s visit.
Many people mistakenly assume that you will only get the benefit of your copays after you meet your deductible for the year. This is not true as the whole advantage to having a copay on the plan is that you do not have to meet your deductible you simply pay the copay immediately. (A similiar point of confusion is that there is of course still a deductible on the copay plans. When dose that come into play? A good rule of thumb is that you will have to meet your deductible for anything that the copay does NOT cover).
2. Plain Deductible Plans (no copay) – These plans are cheaper than the copay plans because they ususally cover all of the same things as the copay plans but of course there are no copays for things like Doctor’s visits and prescriptions.
Using the same example as above where you have a $200 Doctor visit bill – with a plain deductible plan with no copays you will be responsible to pay all $200 until you reach your deductible for the year.
3. Health Savings Accounts (HSA’s) – Health Savings Accounts are a fairly new invention. They became popular about 5-6 years ago and are an offshoot of the Medical Savings Accounts (MSA’s). They are exactly like a plain deductible plan (HSA’s never have copays) and have fairly high deductibles (which lowers the monthly premium versus a comparable lower deductible plan).
The main difference between Health Savings Accounts and the plain deductible plans is that they must have a higher deductible and the IRS allows a savings account to be coupled alongside of the plan with some tax advantages. All money (up to certian IRS limits) that you contribute into the savings account portion of your HSA (over and above your monthly plan premium) allows you a tax deduction on the front of your 1040 tax return and grows tax free and allows for tax free withdrawals as long as the money in the account is used to pay for medical expenses.
The goal of the HSA is that after a couple of years you may have a nice little balance in your savings account which will roll over from year to year and be used to pay for all medical expenses and can even be used to fund retirement after the age of 65 with no penalty for withdrawals (a 10% penalty is imposed for any withdrawal from the savings account that is not for qualified medical expenses – with the definition of qualified medical expenses being quite broad in practice)