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Medical expenses can get very large very quickly, especially if you get sick, are in an accident, or have an ongoing health issue. In fact, medical bills are one of the leading reasons why people go into debt and file for bankruptcy.

One way to help protect both your health and your financial well-being is to purchase health insurance.

While these plans also have costs associated with them — in the form of premiums, deductibles, copays, and other fees — buying coverage can often be worth the investment.

Finding the right plan for your needs and budget, however, can sometimes be daunting. And, if you’re shopping for health insurance for the first time, it may seem like these companies are speaking an entirely different language.

Fortunately, we’re here to help guide you through all the health insurance basics you need to know when shopping for insurance plans, whether it’s through the federal marketplace, an employer, or directly through an insurance company.

What Does Health Insurance Cover?

The Affordable Care Act (ACA), also known as Obamacare, made covering certain health care services a requirement for all health insurance plans available to consumers.

These required services are known as the 10 health essential benefits. These 10 categories of services include:

•  Ambulatory patient services (outpatient care that you can receive without being admitted to a hospital)
•  Emergency services
•  Hospitalization for surgery, overnight stays, and other conditions
•  Pregnancy, maternity, and newborn care
•  Mental health and substance use disorder services
•  Prescription drugs
•  Rehabilitative and habilitative services and devices (treatment and devices that help people gain mental and physical skills after an injury or chronic condition)
•  Laboratory services
•  Preventive and wellness services
•  Pediatric services, including dental and vision coverage for children

Different Types of Private Health Insurance

Unless you qualify for insurance administered by federal or state governments such as Medicaid, Medicare, and the Children’s Health Insurance Program (CHIP), you will be in the market for private health insurance, which refers to any health care plan offered by a health insurance company.

These options typically include:

Employer-Sponsored Insurance

Also sometimes referred to as “group insurance,” employer-provided health insurance plans are private plans purchased and managed by your employer.

Employer-sponsored plans need to follow the same rules as other private insurance plans and cover the 10 essential benefits listed above.

Because employer-sponsored health insurance covers a large group of people, premiums are generally more affordable than a comparable individual plan. Plus, in many cases, employers cover a portion of your premium costs, which can make this option even more affordable.

Recommended: Choosing an Individual Health Insurance Plan

Exchange-Based Insurance

While federal and state governments oversee the ACA exchanges, the insurance is offered through private health insurance companies. As a result, exchange-based coverage is considered private insurance.

Depending on your income, however, you may qualify for premium assistance through your state or the federal government when you purchase insurance through an exchange.

Exchanged-based insurance is divided into four metal tiers: bronze, silver, gold, and platinum. The tiers do not necessarily reflect quality of service in the plans, but rather how much you’ll pay in premiums and other out-of-pocket costs.

With bronze plans, for instance, you’ll typically pay higher deductibles and copays but lower premiums. Platinum plans generally charge the highest premiums, but you’ll usually pay the least in out-of-pocket costs. Silver and gold tend to land somewhere in between.

Off-Exchange Insurance

This is a health care plan provided by a private insurance company that is sold separate from the exchanges. It may be purchased through an insurance broker or agent or directly from the insurance company.

Off-exchange plans must cover the 10 essential benefits and follow other rules dictated by the ACA — meaning you don’t have to worry about any loopholes or “gotchas” on off-exchange plans.

With off-exchange insurance, however, there are no government-funded premium subsidies. Also, insurers don’t have to offer a plan at every metal tier. They can offer just one type of health insurance plan.

Short-Term Health Insurance

Short-term plans are designed to provide temporary emergency coverage when you are between health plans or outside of enrollment periods.

Depending on what state you live in, short-term coverage can last up to 12 months, sometimes with the possibility of renewal for up to 36 months.

Short-term plans do not need to be ACA compliant. As a result, these plans do not have to provide essential coverage, most notably, coverage for preexisting conditions. Deductibles and out-of-pocket costs can also be significantly higher than traditional health plans.

Short-term health insurance may still be worth buying to cover a short coverage gap of one or two months if, say, you’re looking for a new job or a new job has a waiting period before your health insurance kicks in. Many large health insurers offer short-term options.

Understanding the Different Types of Plans

Whether you get insurance through your employer, through an exchange, or directly through a health insurance company, you will likely be able to choose between several different types of plans.

You’re also likely to encounter some confusing acronyms while shopping, like HMOs, PPOs, EPOs, or POS plans. Understanding what these letters mean can be important. The kind of plan you choose can have a big impact on your out-of-pocket costs and which doctors you can see.

Here’s a rundown of the various forms of health insurance.

Health Maintenance Organization (HMO)

These plans generally limit coverage to healthcare providers who are under contract with the HMO.

You typically need to have a referral from your primary care doctor to receive care from a specialist or other provider in the HMO network. Care from providers out of the HMO network is generally not covered, except in the case of an emergency.

HMO plans typically have cheaper premiums than other types of private health insurance plans.

Preferred Provider Organization (PPO)

PPOs are typically less restrictive than HMOs when it comes to accessing your network of providers and getting care from outside the plan’s network.

You will likely have the option to choose between an in-network doctor, who you can see at a lower cost, or an out-of-network doctor at a higher cost. Usually, no referrals are necessary to see a specialist.

PPO plans typically have more expensive premiums than HMOs.

Exclusive Provider Organization (EPO)

EPO plans are usually a mix between HMO plans and PPO plans.

EPO plans typically give you the option of seeing a specialist without a referral. However, they generally do not cover out-of-network physicians.

EPO plans tend to have more expensive premiums than HMOs, but may have less expensive premiums than PPOs.

Point of Service (POS)

POS plans are another hybrid of HMO and PPO plans. Plan members typically pay less for care from network providers. Like an HMO, you may need to get a referral from your primary care doctor to see a specialist.

POS plans typically have more expensive premiums than pure HMOs, but may have less expensive premiums than PPOs.

High-Deductible Health Plan (HDHP)

This is a health plan that charges a high deductible (such as $1,400 or more for an individual or $2,800 or more for a family). This is what you would have to pay for health care costs before insurance coverage kicks in.

In return for higher deductibles, these plans usually charge lower premiums.

Often, you can combine an HDHP with a tax-advantaged health savings account (HSA). Money saved in an HSA can be used to pay for qualified medical expenses.

You can deduct HSA contributions from your taxes. Plus, earnings typically grow tax-free in the account, and withdrawals used to pay for healthcare are generally not subject to federal taxes.

Recommended: How Do I Start a Health Savings Account?

Catastrophic

These health plans are typically designed to cover only dire circumstances. They tend to have very high deductibles and lower premiums than other plans.

Catastrophic plans can help if you get seriously ill or injured, but you’ll usually pay a large chunk out of pocket for all other healthcare costs.

Catastrophic plans on the exchanges are only available to people under age 30 and people of any age with a hardship or affordability exception.

💡 Quick Tip: Next time you review your budget, consider making room for additional insurance coverage. Think of it as an investment that can help protect you from a major financial loss.

Key Features That Determine How Much You Pay

When you shop for a health insurance plan, it’s important to know which features decide how much you’re actually going to pay for health care.

These out-of-pocket expenses can typically be grouped into five major features of your health insurance plan. These include:

Premium: This is the amount of money you pay to your health insurance company each month to stay enrolled in your plan and keep your coverage.
Deductible: This is how much you need to pay for health care services out of pocket before your health insurance kicks in. Your plan may have a family deductible in addition to individual deductibles. You may want to keep in mind that the deductible and out-of-pocket maximum are two different things (more on that below). Plans with lower premiums tend to have higher deductibles.
Copayment: Often shortened to “copay,” this is a fixed amount that you pay for a specific service or prescription medication. Copayments are one of the ways that health insurers will split costs with you after you hit your deductible. You will pay copayments until you hit your maximum out-of-pocket amount.
Coinsurance: This is another way that health insurers will split costs with you. Unlike a copay, coinsurance usually isn’t a fixed cost. It’s typically a percentage of the cost that you pay for covered services. For example, if you have a coinsurance of 20%, you’ll pay 20% of the cost of covered services until you reach your out-of-pocket maximum.
Out-of-pocket maximum: This refers to the most you’d ever have to pay for covered health care services in a year. Payments made towards your deductible, as well as any copayments and coinsurance payments, generally go toward your out-of-pocket limit. Typically, monthly premiums do not count.

How to Buy Health Insurance

If you are employed and your benefits include health insurance, you may be eligible to buy coverage through your employer, either at your date of hire, during open enrollment season, or if you experience certain qualified changes of status such as a marriage or birth of a child.

Another option is to buy insurance through the exchanges at Healthcare.gov . Here, you can also determine if you qualify for a premium subsidy. You may also be given the option of purchasing a plan through your state’s exchange.

You can sign up for exchange coverage during the annual open enrollment period, which typically runs from November 1 through January 15. (Some states have longer enrollment periods.)

Or, you may qualify for a special enrollment period, which allows you to purchase coverage at any time. Loss of employer-based insurance or a move to another state are examples of situations when you might qualify for a special enrollment period.

You can also buy private insurance plans directly from insurance companies. You can research individual and family plans on insurance company websites or work with an insurance broker who specializes in private coverage. Online insurance brokers are also a place to compare plans and prices.

The Takeaway

Health insurance can protect you from large medical bills should you or a member of your family experience an illness or accident. You may be offered health insurance through your employer. Or, you might choose to buy health insurance through the federal health insurance marketplace or directly from a private health insurer.

When looking for a plan that fits your situation and budget, it’s a good idea to review all costs involved. This includes deductibles, copays, and coinsurance, in addition to premiums. You’ll also want to ensure the network of providers and services that each plan covers fit with your health needs. After all, having the right coverage in place can help you maintain your health and preserve your financial security.

When the unexpected happens, it’s good to know you have a plan to protect your loved ones and your finances. SoFi has teamed up with some of the best insurance companies in the industry to provide members with fast, easy, and reliable insurance.

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPTO0823138

At the end of summer 2023, a gallon of regular gas cost just a hair under $4: perhaps not the worst you’ve ever seen, but not exactly a bargain basement price either.

According to J.D. Power, Americans spend about $5,000 on gas a year, a not insignificant figure.

If you’re looking for ways to save on this expense, this guide can help. It shares seven easy ways to boost your gas mileage, meaning you’ll go farther on a tank’s worth. Read on to learn how to save.

How to Improve Gas Mileage

Gas mileage is measured in miles per gallon (mpg). If a vehicle gets 25 mpg, this means that, on average, it can be driven for 25 miles for every gallon of gas pumped into it. Overall, miles per gallon is typically higher for a vehicle during highway driving than on city streets where speeds are slower and vehicles idle at stop signs and traffic lights. Vehicles can, in fact, typically get five more mpg with highway driving than with city driving.

Fortunately, there are ways to improve gas mileage no matter where you’re driving, many of them reasonably simple. To help, here are seven money-saving ideas for better gas mileage and two busted myths.

1. Reduce the Weight

Get rid of excess weight in the vehicle by removing unnecessary items in the trunk and backseat to lower fuel consumption. Every 100 pounds added to a car boosts fuel consumption by 2%. Think carefully about what to remove. Maybe those golf clubs don’t have to perpetually stay in your trunk. Taking out a toolbox full of tools, however, might reduce the weight being carried, but those items might be sorely missed in an emergency.

2. Watch Your Speed

In general, the mileage a driver gets from a gallon of gas decreases pretty quickly when traveling more than 50 miles per hour, according to the U.S. Department of Energy (DOE). Lowering your speed by five to 10 mph can raise fuel efficiency by 7% to 14%. Why? Higher speeds decrease fuel economy because of two factors: air resistance and tire rolling resistance.

3. Keep Tires at Optimal Pressure

The DOE reports that keeping your tire pressure in the sweet spot can enhance your gas mileage. If your tires are underinflated, you can lower gas mileage about 0.2% for every drop of 1 psi (pressure per square inch) in the pressure of the tires. Overall, proper inflation can boost your mileage by up to 3%, which can add up at the pump.

4. Monitor Your Driving

Using a trip computer, drivers can receive immediate feedback about the impact that an action, such as the rapid acceleration of a vehicle, has on gas usage. These real-time, personalized insights into how to improve fuel economy, fuel consumption, maintenance reminders, and more.

5. Plan Your Gas Stops

Using a combination of strategies for how to improve gas mileage can help to reduce fuel costs. Having to fill up at a pricey pump, though, can negate all of that hard work. So, when out on the road, especially when away from home in unfamiliar territory, consider using apps like Gas Guru or GasBuddy. They can help you to find the most affordable gasoline in town, wherever you are when it’s time to fill up.

Recommended: 25 Ways to Cut Costs on a Road Trip

6. Road Trip Wisely

If you’re planning a trip and have a choice of cars to drive, some factors to consider are the car’s size (you want enough room to be comfortable as you travel as well as any luggage you bring) and its gas mileage. Using a trip calculator can estimate fuel consumption for each car so you can pick the one that will cost the least in gasoline.

7. Cold Weather Strategies

When thinking about how to get better gas mileage, take a look at the thermometer, and plan your winter driving carefully. FuelEconomy.gov states that the miles per gallon can be 15% lower, more or less, at 20°F than at 77°F. Since most of us can’t hibernate all winter long, money-saving suggestions include warming up your car for 30 seconds only and then driving gently to allow the vehicle to warm up in a more cost-efficient way. Also, combine trips whenever possible — especially in the winter.

Myths About Gas Mileage

Some strategies to improve gas mileage are tried and true, but there are still some myths that continue to be perpetuated. Here are a couple of common myths that don’t prove to be true when it comes to saving money daily on gas.

1. Refueling When Cool

Some people buy gasoline in the morning when temperatures are cooler, believing that this will help them get better gas mileage. The theory behind this idea is that cooler gas is denser, so you’ll get more bang for your buck in the mornings. However, consumer watchdogs say this won’t make any practical difference though, especially since most gas stations store the gasoline underground where temperatures are pretty stable.

2. Changing the Air Filter

In the past, people believed that dirty air filters reduced fuel economy because of lowered air intake. While studies have shown that a vehicle’s acceleration was lessened when an air filter change was overdue, swapping it out probably won’t boost fuel economy in most cars. Wondering what changed? Engine computers have the ability to compensate for the reduced airflow to maintain the right ratio between air and fuel.

Budgeting for Gasoline and More

How much can you afford to pay for gasoline each month? If you aren’t really clear about that, making a monthly budget can help. Basic steps of creating a budget include:

•   Gathering all of your financial documents together

•   Figuring out your monthly take-home pay

•   Adding up monthly fixed and variable expenses

•   Using this information to create a workable budget

While creating your budget, consider how much gas is used for needs (such as getting to work) and how much for wants (driving around town while trying to decide what restaurant to pick). One popular personal budgeting method involves dividing expenses into needs and wants and then also having a category for savings. Called the 50/30/20 rule, this method divides after-tax income in this way:

•   50% towards needs

•   30% towards wants (or discretionary expenses)

•   20% towards savings

This isn’t the only way to create a personal budget, though. There are plenty of budgeting resources to help you find the method that works best to manage your money.

The Takeaway

Gas prices can take a chunk out of the budget but by understanding a few important principles, you can help improve your gas mileage and make the most of the money you spend at the pump. Doing so can be part of taking control of your finances and managing your money well.

Photo credit: iStock/FG Trade

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