Even the basics of insurance coverage can be complicated. Insurance 101 breaks down those basics to make things clear for you.
Glossary of Terms
Copayment (Copay) – The amount you pay to a healthcare provider at the time you receive services. You may have to pay a copay for each covered visit to your doctor, depending on your plan. Not all plans have a copay.
Deductible – The amount you pay for covered in-network services each year before the plan pays for specified services. Some plans have a separate in-network and out-of-network deductible.
Out-of-pocket maximum – This is the annual limit on your costs. After you meet the maximum out-of-pocket amount, your plan pays for 100% of covered services. You may still pay copayments, and you will still have to pay for non-covered services. Refer to the plan’s Benefits Summary for more details.
Premium – The cost of the insurance policy itself. With the Affordable Care Act, many people qualify for “advanced tax subsidies” that help pay for their insurance premium.
Prescription Drugs – Any medicine that may not be given without a prescription because of federal or state law.
Provider (Healthcare Provider) – A hospital, facility, physician or other licensed healthcare professional.
Provider Network – The doctors, hospitals, facilities, clinics and other healthcare providers that a health plan contracts with. Nearly all insurance plans are associated with a specific provider network. It’s imperative that you research to see if your health insurance plan accepts your doctors (i.e. if your doctors are in the provider network).
Types of Health Insurance Plans – No single health insurance plan will cover all costs associated with medical care, but some cover more than others. Want to unlock the differences between plans? Here’s your key…
Health Maintenance Organization (HMO) – With an HMO, you receive a range of health benefits for a set fee. There are usually no deductibles. However, most plans require a small copay per office visit (around $20 to $40). With an HMO you must choose a primary care physician from the plan’s list. This doctor becomes your “gatekeeper” for all your medical needs. This is the doctor you call or see when you are sick, and if necessary he or she will refer you to a specialist or other providers within the HMO network. With most HMOs you will not receive benefits if you go out-of-network (i.e. see a provider that is not on the plan’s list), except for emergency care.
Preferred Provider Organization (PPO) – In this system, you may seek treatment from an approved network of providers, or you may see other providers outside the network. In most cases you will pay a small copay for each visit plus satisfy a deductible before any benefits are paid by the insurance company. After that you’ll pay a set coinsurance amount. With a PPO it is less expensive to visit one of the providers that is on the plan’s list. You can go outside the plan’s list, but your share of the bill will be higher.
Exclusive Provider Organization (EPO) – EPO plans combine the flexibility of PPO plans with the cost-savings of HMO plans. You won’t need to choose a primary care physician, and you don’t need referrals to see a specialist. But you’ll have a limited network of doctors and hospitals to choose from. Plus, EPO plans don’t cover care outside your network unless it’s an emergency.
Health Savings Account (HSA) – A health savings account (HSA) is not an insurance plan at all. Health savings accounts are used in combination with a high deductible health insurance plan. Money is placed into a tax-favored savings account. The money in that savings account can help pay the insurance deductible. Once the deductible is met, the insurance starts paying. Money left in the savings account earns interest and is yours to keep.
If you have a choice from more than one plan, compare how each plan handles deductibles, copays, out-of-pocket maximums and out-of-network care. Plus, check to see if your preferred doctors and facilities are part of the plan’s provider network.