Health Insurance - Clear and Simple
You would never buy a car or a new computer without doing a little bit of research first. Jumping blindly into a major purchase is never a good idea and shopping for health insurance is no exception. Your first step toward healthcare satisfaction is understanding the confusing language of the insurance world. Knowing these basic terms will help simplify your shopping experience.
Claim: A claim is a formal request to an insurance company to pay for healthcare services. Depending on your insurance plan, some healthcare providers will not bill your insurance company directly. In this case, the patient is fully responsible for filling out the necessary paperwork and sending it to their health insurance company to request payment for their care. This process is known as filing a claim.
Coinsurance: Coinsurance is the percentage you must pay out of pocket for your care. Generally, insurers limit the amount they'll pay for healthcare services. For example; if your insurer agrees to pay 90% of your healthcare costs, you will be responsible for paying the remaining 10%. Your percentage of the bill is called coinsurance. Coinsurance policies are most common in high end plans that allow their members to go out-of-network for care.
Co-pay: A co-pay or copayment is a small, fixed fee that some plans require you to pay before you receive care or get medication. For example; imagine that your cholesterol medication costs $500.00 and your insurance plan has a co-pay of $15.00 for prescription drugs. In this case, you will only have to pay a flat $15.00 fee to get your medication. The rest is paid by your insurer.
Deductible: A deductible is the amount you must pay out of pocket before your insurance plan kicks in. For instance; assume your plan has a $500.00 deductible and you go to a hospital for a medical procedure. If the total cost of your procedure is $1,500.00, you will be responsible for paying the first $500.00 out of pocket. Your insurer will pay the remaining $1,000.00. Alternatively, if your procedure cost $200.00, you will be responsible for the paying the entire cost of your care. Your insurance will only pay for medical expenses that exceed the amount of your deductible.
Take note that not all insurance plans require their members to pay a deductible. Those that do generally only impose a deductible on certain types of care. For example; a plan may only charge a co-pay for visiting an in-network physician. But that same plan could also require their members to pay both a deductible and coinsurance if they go out-of-network to see a specialist. Each plan is different, and a little careful reading is the best way to protect yourself from hidden costs.
Formulary: When it comes to prescription drugs, many insurance plans are not all inclusive. Some plans won't cover a particular kind of medication. Some plans will only cover generics. The list that details all the prescription drugs a particular plan covers is called a formulary.
In-network and out-of-network care: To lower the cost of healthcare, many insurance companies form partnerships with a network of healthcare providers. Insurers provide their network of healthcare professionals with a steady stream of business by either requiring or incentivizing their members to get in-network care. In return, in-network healthcare providers offer their services at a discounted rate. If you get medical care outside of your insurer's network, your plan may pay less or not pay out at all.
Open Enrollment Period: Unlike private insurers, the public exchange isn't open for business all year long. The period of time when you can apply for health insurance through the public exchange is called the open enrollment period. After enrollment closes, you won't be to able apply again until the beginning of next year's open enrollment season. However, there are some exceptions that will allow you to buy from the public exchange during a closed enrollment period. For instance; if you have a baby and need to update your family's insurance plan, you may be eligible for a 'special enrollment period.'
Public exchange: Public exchanges are insurance marketplaces, run by either your state or the federal government. These marketplaces are the result of the Affordable Care Act. Therefore, all of the insurance plans available through public exchanges must fully comply with federal regulations.
Premiums: Even if you never use your health insurance, you still have to pay for having an insurance plan. Premiums are the regular, recurring bills that you or your employer must pay for your insurance. In most cases, premiums must be paid out each month. But some insurers also use quarterly or yearly billing cycles.
Primary Care Physician: Some insurance plans require their members to have primary care physician or PCP. Your primary care physician serves as your main healthcare provider. If you need care that is beyond their expertise, they can refer you to a specialist.
Private exchange: A private exchange is a health insurance marketplace run by private companies, such as brokerage or insurance companies. These companies negotiate with insurers to get special deals for their members. While public and private exchanges offer many of the same services, private exchanges are not a part of the Affordable Care Act and tend to target employers and retirees.
Subsidy: The Affordable Care Act provides income based financial assistance to people who need help paying their monthly premiums. This assistance comes in the form of subsidies.
So, finding a quality, affordable health insurance plan doesn't have to be a leap of faith. Just like with any other major purchase, having the right knowledge is the key to finding exactly what you're looking for.