Health insurance is complicated. Shopping for a health insurance plan can be overwhelming, especially if you aren’t familiar with some of the more common health insurance terms. Read through our definitions below to gain a better understanding of the basics of health insurance.
A premium is the amount you or your employer pays periodically to an insurance company in order for them to provide you with insurance coverage for a defined period of time. The cost of your premium is determined by your location, age, family size, tobacco use and the plan category.
Also commonly referred to as copay, a copayment is a fixed amount that you pay in addition to your premium for covered health care services including doctor’s visits, specialist’s visits, or prescription drugs. Once your copay is paid, your health insurance provider covers the remaining cost of the service. The amount of your copay can vary depending on the type of health care service.
Here is a sample of what your copayments might looks like:
- Doctor’s Visits – $30
- Specialist Visits – $60
- Prescriptions – $20
A deductible is the amount that you owe for health care services in which your plan covers before your health insurance or plan begins to pay. Let’s say, for example, that you have to go in for a covered procedure that costs $3,000. Your deductible is $1000. In this scenario, your plan won’t pay anything until you’ve met your $1000 deductible for this covered procedure. The deductible may not apply to all services.
With a coinsurance plan, you and your health insurance company each pay for a percentage of your health insurance costs once you meet your deductible. A common example is an 80/20 coinsurance plan. For example, let’s say your health insurance plan’s allowed amount for an office visit is $100 and you’ve met your deductible. Your coinsurance amount of 20% would be $20 and the health insurance plan pays the rest of the allowed amount. Other common splits include 70/30 and 90/10.
PPO Insurance Plan
A PPO plan or “Preferred Provider Organization” plan is a type of health insurance plan that gives you a choice to get care within or outside of a provider network. Preferred providers are considered “in-network” and will cost less than if you went to out-of-network providers. You still have the freedom to receive care anywhere you’d like, but you will pay more for out-of-network providers. With a PPO plan, you are not required to choose a primary care physician (PCP), and you can see other providers in your network without a referral. If you’re shopping for a new health insurance plan and are considering a PPO plan, check to see if your current doctors and specialists are a part of the PPO network for that plan.
HMO Insurance Plan
With an HMO plan, or “Health Maintenance Organization” plan, you are usually required to choose a primary care physician (PCP). This doctor is responsible for working with you to coordinate all of your health care. Doctors and other health care providers who take part in HMOs become part of a group that can provide services to patients who take part in this HMO plan. If you have an HMO plan and want your insurance to pay for your healthcare costs, you will have to choose a doctor that is considered in-network.
A health savings account, or HSA, is a medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan. An HSA allows people with high-deductible health plans (HDHPs) to save money for medical expenses. Contributions are made to the account by your or your employer and are limited to a maximum amount each year. The funds in your HSA account can be invested over time and can be used to pay for qualified medical expenses. The money that you put into your HSA is tax deductible, grows tax free and certain withdraws are tax free if they are for qualified medical expenses. In addition to doctor’s visits and prescription drugs, over-the counter drugs and other health-related items may also qualify.
Are you looking for a new health insurance plan? If so, consider contacting HealthMarkets Insurance Agency. We offer a broad portfolio of health plans from recognized national and regional carriers. We’ll learn about what’s important to you, compare the costs and coverage of all of your options, and help you find the coverage that’s right for you at a price that fits your budget. And we’ll do it at no cost to you.