Understanding ins and outs of your health insurance plan may be difficult, but it’s an important step in protecting your physical, mental and financial health. To help you out, we’ve assembled some health insurance basics that apply to almost any plan.
To begin with, there are so many insurance-specific terms that it’s easy to get tripped up and confuse them. Here are four you need to understand:
- Deductible: This is the amount you must pay out-of-pocket before the insurance company will contribute to any of your health-related expenses.
- Coinsurance: This is the amount, usually a percentage, that you pay for any health care costs after you’ve met your deductible. For example, if your deductible is $1,000 and you require a service that costs $2,000 and have 25 percent coinsurance, then you pay $1,000 to meet the deductible and 25 percent of the rest ($250), for a total of $1,250.
- Copay (or copayment): This is typically a small, fixed amount paid when getting a health service or filling a prescription. The amount differs by service. A basic doctor’s visit may have a $25 copay and a trip to the ER may have a $200 copay. Depending on your policy, the copay may or may not count toward your deductible.
- Out-of-pocket maximum: This is the maximum amount you will pay for health costs in your plan year. It typically includes your deductible, copays and any coinsurance you pay throughout the year.
One big consideration when enrolling in health insurance is the network. A network is a group of physicians, clinics, hospitals and other healthcare providers that agree to accept your health insurance and work with your provider to negotiate rates for services.
“By choosing a provider that is ‘in-network,’ you will likely pay less for your care because your insurance company has already established a relationship with that doctor and negotiated agreed-upon rates. However, if you go out-of-network for care, you may be responsible for a larger portion of your bill (or perhaps all of it) since your insurance company does not have a contract with that doctor,” says Martin Rosen, executive vice president at Health Advocate, a health care advocacy and patient-assistance company.
If you have doctors you like, you’ll need to check with them anytime you make any changes to your plan to make sure they will still be considered in-network, advises Eric Stauffer, a former insurance agent turned consumer advocate at ExpertInsuranceReviews.com. “Even if you stick with the same coverage, doctors periodically change which insurance companies they accept. It never hurts to check with your doctor during open enrollment.”
It’s also a good idea to remind your doctors any time they refer you for lab work or to a specialist, so they can refer you to someone who’s also in your network.
If you take medication regularly, it’s critical to understand your prescription coverage. “Just because you have health insurance does not mean the medication you need will be paid for completely. When signing up for a new plan, call the company in question if you are unsure whether or not your medication will be covered,” Stauffer suggests.
High-Deductible Health Plans
High-deductible health plans, or HDHPs, are becoming increasingly popular in many workplaces. “These plans often have lower monthly premiums, but require you to pay more upfront for your care, so it’s important to weigh your options carefully,” Rosen says. If you are healthy, this type of plan may make sense for you. If you have a chronic illness, however, or if you are uncomfortable with even the possibility of paying a much higher deductible, you may want to go with a traditional plan.
Additional Resources for Help Understanding Your Health Insurance
Any time you’re unsure about something in your health insurance plan or if you have questions during open enrollment, don’t hesitate to call the insurance company directly or check online for more information. Additionally, your company’s human resources department or benefits provider may be able to assist you. And, if you’re on the fence and can’t decide between two plans, your doctor or pharmacist may also be able to help, given they have access to your health information.