If your eyes glaze over at the mention of anything health insurance related, you’re not alone. In fact, most people in America I can’t define the key health insurance terms.
But understanding health insurance is very important. People who don’t understand the concepts of health insurance end up finding themselves either spend more money what they need from their health coverage or avoid the care they need.
Whether you obtain health insurance through employment, the Health Insurance Marketplace (Healthcare.gov), or a government program, arm yourself with basic knowledge so you can get the most out of your coverage.
Types of Health Insurance Fees
Unless you get free or subsidized coverage through Medicaid or another government program, you’ll likely have different types of costs no matter what type of health plan you choose. These costs are often referred to as “cost sharing.” Common costs to watch out for include:
1. Monthly bonus
The monthly cost you pay for health insurance coverage.
2. Deductible
The amount you must pay out of pocket before your health insurance starts paying for the services you use. If you receive health care services before you meet your deductible, you will generally have to pay 100% of the cost, even for services covered by insurance.
3. Co-payment (Copay)
Fixed fees you pay each time you use health services. Sometimes co-pays, also called co-pays, are expected when you arrive for your appointment, and sometimes they are charged later. Copays may vary depending on the type of health care provider (HCP) you see (for example, primary care physician (PCP) or physician). specialist) or type of service (e.g., emergency room or office visit).
4. Coinsurance
The percentage of health care costs you must pay once you meet your deductible. For example, if you have a 20% coinsurance for hospital services and you receive a hospital bill for $10,000, you will pay $2,000.
Other health insurance conditions to know
Health insurance has its own terminology, which can be confusing. Some key health insurance terms to know include:
1. Networked Providers
Many health plans have a set of health care providers with whom they contract. Healthcare professionals who subscribe to the plan are called “in-network.”
2. Out-of-network providers
Health care professionals who do not participate in a health plan’s network are considered “out of network.” Depending on the type of plan you have, out-of-network providers may be covered at lower rates than in-network providers. This means your insurance covers less of their costs, so you would pay more to see them.
Some plans don’t offer coverage for out-of-network providers at all, meaning you’d pay 100% of the cost to see them.
3. Maximum disbursements
Once you’ve spent money on your deductible, co-pays, and coinsurance, there’s a limit to how much you’ll have to pay out of pocket each year. This limit is called the “maximum amount to pay”. Once you reach this amount, you will not be charged any additional fees for services covered by in-network providers.
You may still be billed for care you receive from out-of-network providers or for services that are not covered.
Monthly premiums do not count towards your maximum amount payable.
4. References
In some health plans, you must get a referral – sort of like authorization – to see specialists or other healthcare professionals for certain services. Referrals are written orders from your PCP.
5. Prior authorization
To receive certain services or prescriptions, some plans require that you obtain
preliminary authorisation, which is a prior authorization or prior approval. Your healthcare provider will typically submit forms to your insurer on your behalf, although it is technically your responsibility to ensure you obtain approval before seeking service. If you don’t get pre-authorization for services that require it, the health plan may deny your application and you may have to pay for all services yourself – or not get them at all.
6. Open registration
Registration open is the period set each year during which you can take out health insurance or change plans. The open enrollment deadline varies by company for employment-based insurance and for different programs such as Medicare or the Health Insurance Marketplace. Outside of the open enrollment period, you cannot change your plan unless there is a change in your life circumstances, called a “qualifying life event», which allows you to benefit from a special registration period.
7. Special registration period
If your situation changes, you may benefit from a special registration period. This means you can sign up for or change insurance outside of an open enrollment period. Circumstances that might qualify you for a special enrollment period include changes in family structure (for example, having a baby, getting married or divorced), moving, or losing employment benefits.
8. High Deductible Health Plans
High Deductible Health Plans (HDHP) are plans with high deductibles, meaning the amount you pay out of pocket before your health insurance begins to cover services is more than a typical amount. The threshold for an HDHP changes every year. In 2022, HDHPs were defined as plans with deductibles of at least $1,400 for individuals and $2,800 for families. Any of the common health plan types can be an HDHP.
9. Health Savings Accounts
Health Savings Accounts (HSA) are savings accounts that allow you to use tax-free dollars for qualified healthcare expenses. HSAs are often combined with HDHPs to help you pay for healthcare costs before meeting the deductible. Your HSA balance is yours, so unused amounts carry over and can accumulate over time.
10. Flexible Spending Accounts
Like HSAs, flexible spending accounts (FSAs) are accounts that allow you to use tax-free dollars for qualified healthcare expenses. Unlike an HSA, the money in your FSA doesn’t roll over, so you lose any money that isn’t spent by the end of the year. FSAs are a benefit offered by your employer, not your health insurance plan.
Read: Health Insurance 101 for Women: What you are entitled to as a woman >>
Types of health plans
There are several types of health insurance plans, with different costs and rules. The most common types of health plans include:
1. Health Maintenance Organizations (HMOs)
HMOs often have the lowest monthly premiums, but they are also usually the most restrictive. In an HMO, you must have a primary care physician and obtain referrals from them to see specialists. An HMO only covers services you receive from health care providers that participate in their network. Outside of this network, HMOs generally do not cover any costs except in emergencies.
2. Preferred provider organizations (PPO)
PPOs tend to have higher monthly premiums than HMOs because they give you more flexibility. PPOs do not require a member to have a PCP or obtain referrals to see specialists. Like HMOs, PPOs have a network of contracted HCPs. You generally pay more, but not the full cost, to see medical professionals outside the plan’s network.
3. Point of Service (POS) Plans
POS plans are like a cross between HMOs and PPOs. POS plans may require you to have a PCP and obtain references before consulting with specialists. POS plans have contracted HCP networks, but tend to allow you to view HCPs outside of the network for a higher cost. Outlet premiums typically fall between HMOs and PPOs.
4. Exclusive provider organizations (EPO)
Monthly premiums for EPOs are generally higher than HMOs but lower than PPOs. Like HMOs, EPOs only cover services you get from HCPs that participate in their network, except in emergencies. You are generally not required to have a PCP or obtain a referral to see a specialist as long as they are in your plan’s network.
Medical help
Medicaid is a health coverage assistance program for children, adults, pregnant women, people with disabilities, and seniors who qualify because of low income or other criteria.
Health Insurance
Medicare is a national health insurance program offered by the United States government for individuals aged 65 and older and individuals with certain illnesses and/or disabilities. Medicare has four different parts. Some are free and others require a monthly premium.