The topic of health insurance causes eyes to glaze over and brains to overload. However, it is an essential piece of the puzzle regarding your health. Health care can be quite costly, especially when living with a bleeding disorder. Having health insurance is vital to lessening that financial burden. The good news is that you don’t have to be an expert. Having basic knowledge and knowing where to go with questions is really all you need.
A good place to start is with some fundamental insurance terminology. It is a special kind of lingo with lots of acronyms.
– In-Network – This refers to providers and hospitals that have contracted with an insurance plan to offer health care services at an agreed amount fee schedule. Any charges that are over the contracted amounts must be written off and not charged to you.
– Out-of-Network – An out of network provider/facility does not have a contracted fee schedule with your insurance plan. This means these providers do not have to write off any charges and you may be responsible for paying these fees. The best way to know if a provider/facility is in or out of network is to confirm with your insurance plan.
– PPO – Preferred Provider Organization plan. This type of plan will most likely pay for services when seeking health care in-network or out-of-network. You should not need a referral to seek care outside of your network. However, there is a benefit for staying in the network. A provider in your network will have an agreed upon fee schedule and you can’t be charged more than the network allows.
- Example: You see an in-network provider for an office visit and the charge is $150. Your network only allows $75 for that office visit. If you had to pay 20% of that office visit, you would only have to pay $15. The in-network provider would have to write off the difference between the charged amount and the allowed amount ($75). However, if that provider was not in network and charged $150 you would owe 20% of $150 ($30).
– HMO – Health Maintenance Organization plan. Typically, this type of plan requires you to choose a primary care physician (PCP). Your PCP is your first point of contact for any health care. You will need to have a referral created by your PCP to see any specialist or you may not have coverage for those services. This plan typically will only pay for services that are performed by providers who are in-network and contracted with the HMO itself.
– POS – Point of Service plan. These plans are a type of hybrid. You usually need to choose a PCP who will be your point of contact for specialist care. However, your PCP can refer you to an out-of-network specialist and you should have coverage. Keep in mind that even with referrals, medical expenses could be higher from an out-of-network provider.
– High Deductible Health Plan (HDHP) – A plan qualifies as an HDHP plan when it has a high deductible amount as defined by the IRS. For 2021, those amounts are $1,400 for an individual or $2,800 for a family. The IRS also sets limits on the total out-of-pocket limits ($7,000 individual and $14,000 family). If you have a HDHP, you can also set up a Health Savings Account.
- Health Savings Account (HSA) – This is a savings account that allows individuals to save money on a pre-taxed basis to be used for medical expenses. This account is usually set up at a bank that allows for administration.
– Open Enrollment – This is the time period each year where you can look at the different health insurance plans available to you and change plans if you choose.
– Premium – This is the amount you’ll pay the insurance company for the benefit of having an active insurance plan. Usually paid monthly and can be pre-tax dollars. It is important to keep this monthly amount in mind when looking at your overall insurance costs.
– Deductible – The dollar amount you will have pay annually for health services before your insurance company pays its share.
- Example – you have a $1,000 deductible then your insurance plan pays 80% and you pay 20% of charges. You will pay the first $1,000 of medical bills before your insurance pays 80% of any charge.
– Out-of-Pocket Maximum – Also known as Stop Loss. This is the maximum dollar amount you will pay each year out of your pocket for your health care costs. Usually includes your deductible, coinsurance, and copays.
- Example – You have a $1,000 deductible with a $3,000 Out-of-Pocket max. You’ve already paid the first $1,000, now you will pay 20% of all charges until you’ve paid out $2,000 more.
– Coinsurance – This amount is the percentage you’ll pay for medical expenses after you’ve met your deductible.
- Example – Your insurance plan pays 80% and you pay 20% of an office visit charge. If the charge is $100, your coinsurance is $20.
– Copayment – This is a set amount you owe each time you receive a certain type of medical care.
- Example – You have a $25 copayment owed for your office visit; but if you go to urgent care, your copayment will be $100. Most plans apply your copayments towards your deductible and out-of-pocket, but not all.
Now that you have the basic terms under your belt, you are ready to move on to looking at the different types of plans available to you. Next, we’ll explore private and public insurances and explain more about what the big deal is around open enrollment.
Stick with us! Little by little, we’ll get through all the basics and soon you will have your toolbox ready the next time someone brings up the topic of health insurance.
Also, here is a great further illustration on some of the insurance jargon talked about above.