@AnonymousAccount8 I’ll help break down @ARE_you_kidding_me‘s post because he had some great suggestions.
So yeah, as everyone has explained, the deductible is the amount you pay annually before your insurance company will start helping to cover your expenses.
In AYKM’s plan, this amount is $2500. But then, once he’s paid $2500, the insurance company still doesn’t pay 100% of his medical bills, they pay 80%, and he’s still responsible for the remaining 20%. That continues until he’s paid a total of $17k in medical bills during the year (if he ever even reaches that in a year, lots of healthy folks wouldn’t), at which point he won’t have to pay any more and the insurance company will pay the rest. Apparently this plan is very cheap and he’s only paying $20 a month for it (an incredibly good deal).
He also gets a health savings account (HSA) as part of the plan. This is an account similar to a retirement account in which he gets to choose some amount of money per paycheck to go into the account. So when he gets his paycheck, the chosen amount will be missing as it will have been deposited into his HSA, BUT, he doesn’t have to pay taxes on that portion of his paycheck. So it lowers the total amount of tax taken from his paycheck. The trade-off is that the money that went into his HSA, while it still belongs to him, can only be spent on health-related expenses. But while this money lives in the HSA account, it will also accumulate interest, so it will naturally grow over time. Free money, basically. The bit about stocks/mutual funds just means that, if he wanted to gamble a little bit and try to make the money grow faster by investing it in the stock market, he could do that, but he’d risk losing some of it. The alternative is to just let it grow at a fixed, slower rate. And, unlike certain retirement accounts where you can put in money tax-free at the beginning but then you have to pay taxes on it when you withdraw it when you’re old, he also won’t have to pay taxes on it upon withdrawal. A lot of times with an HSA, the restriction that you can only use it for medical expenses is lifted when you turn 65, so if he still had money in that account at that age, he could spend it on anything he wanted. Then essentially he’d just avoid paying taxes on some portion of his income over the course of his life, legally, by putting it into his HSA.
I understand though at your income level you probably don’t have much disposable income to just throw into something like an HSA, so I don’t know how much that helps.
Does that help unravel it?