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Health Insurance Explained
Insurance can be confusing... Health insurance is no different.
If you are shopping for health insurance coverage, it can be intimidating seeing all kinds of words and phrases used that you have never seen before. Knowing the difference between coinsurance and a copayment is an important part of making a decision. Without all of the information, you may find yourself paying for a policy that costs you money but doesn’t really help your specific health insurance needs.
Below is a glossary of common terms that you will see when shopping for health insurance, particularly ACA (Obamacare) plans.
What is a premium?
A health insurance premium is the monthly subscription cost to be enrolled in coverage.
What is a deductible?
A deductible is the cost threshold of qualified expenses that must be met before the insurance company will start paying for expenses.
For example, with the Gold 3000 plan ($3,000 deductible):
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An elective surgery costs $8,000 - the first $3,000 is paid out of pocket and the insurance will pay 80% of the remaining $5,000 that is due. The total cost is $4,000 of the $8,000.
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An elective surgery that costs $16,000 – the first $3,000 is paid out of pocket and the insurance will pay 80% of the remaining $13,000 that is due. The total cost is $5,600 of the $16,000.
What is coinsurance?
Coinsurance is the percentage of qualified costs that the insurance company pays after you meet your deductible. It varies by policy. After the deductible is met:
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Bronze - 60%
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Silver - 60%
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Gold - 80%
What are copayments?
Copayments are what you are required to pay to see a doctor or specialist. It is a fixed amount that varies depending on your policy.
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Bronze - Primary care doctor - $45 ; Specialist/Urgent Care - $115
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Silver - Primary care doctor - first three visits free, then $50 ; Specialist/ Urgent Care - $150
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Gold - Primary care doctor - First three visits free, then $5 ; Specialist/Urgent Care - $30
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*Some may qualify for an enhanced plan with even lower copayments. Get a quote to see if you qualify*
What is an out-of-pocket max?
An out-of-pocket max is the absolute maximum that an enrollee will have to pay in qualified expenses in one calendar year.
The only expense that doesn’t qualify to count towards the out-of-pocket max figure is copayments at doctor’s offices. Prescription costs DO count towards the Out-of-Pocket Max.
For example, with the Gold 3000 plan ($8150 Out-of-Pocket Max):
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An elective surgery costs $28,500 – the first $3,000 is paid out of pocket and the insurance will pay 80% of the remaining $25,500 that is due. The total cost is $8,100
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An elective surgery costs $30,000 – the enrollee pays a total of $8,150
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An elective surgery costs $100,000 – the enrollee pays a total of $8,150
What are pre-exisiting conditions?
PPO stands for Preferred Provider Organization. In a typical PPO, there are huge cost savings by visiting doctors and practices that are in-network, as mentioned above. Some level of coverage is offered for out-of-network facilities as well, but it is typically much more expensive. A PPO provides more flexibility than an HMO. The best example of a PPO in NC is BlueCross.
HMO stands for Health Maintenance Organization. In a typical HMO, there is no coverage whatsoever offered for out-of-network doctors. While this option has a cheaper premium, it is incredibly important to make sure that you check that a medical facility is in-network in advance or you will have to pay the full cost of the services. If you are unsure whether or not a specific doctor or practice is in-network, be sure to check with your agent. Some common examples of an HMO in NC are Friday Health Plans and Aetna.
What does in-network mean?
Health Insurance companies negotiate with hospitals and doctor’s offices to help keep costs low for their insureds. Those negotiations mean the insurance companies pay less at those facilities and in turn pass on those savings to you. The cost savings can be substantial, so it is definitely worth trying to find in-network options whenever possible.
PPO stands for Preferred Provider Organization. In a typical PPO, there are huge cost savings by visiting doctors and practices that are in-network, as mentioned above. Some level of coverage is offered for out-of-network facilities as well, but it is typically much less meaning you pay much more. A PPO provides more flexibility than an HMO. The best example of a PPO in NC is BlueCross.
HMO stands for Health Maintenance Organization. In a typical HMO, there is no coverage whatsoever offered for out-of-network doctors. While this option has a cheaper premium, it is incredibly important to make sure you check that a medical facility is in-network in advance or you will have to pay the full cost of the services. If you are unsure whether or not a specific doctor or practice is in-network, be sure to check with your agent. Some common examples of an HMO in NC are Friday Health Plans and Aetna.
What is the difference between a PPO and a HMO?