Health Insurance 101
Understanding Your Health Insurance Policy and Plan Options
Like all insurance policies, health insurance is a contract or agreement between you and the insurance company you select. You buy a plan (you can choose from many different types), and the company agrees to pay all or part of your medical costs when you get sick or hurt. As you can imagine, the better or more expensive the plan, the less you will pay when you get sick. Each of the new plans covers all of the Essential Health Benefits and once you reach the annual out of pocket maximum all medical and prescription expenses are covered 100% for the rest of the year. The maximum out of pocket is key indicator you should look at when comparing policies.
There are other important benefits of health insurance. Plans available in the Tennessee Health Insurance Marketplace (and plans available outside of the exchanges) provide free preventive care, like preventative check-ups, mammograms, colonoscopies, vaccines and screenings. One of the most important benefits of having an insurance policy is the negotiated rates you receive when using network providers, you benefit from the insurance companies pricing.
Understanding Health Insurance Terms
What are Provider Networks?You will be enrolled in a network of doctors and hospitals which are called "in network providers with anyone not participating in that network as "non-network providers. This is extremely important as you may not have coverage if you choose to use a doctor or hospital that is not "in your plans network. When you are considering different health plans be sure to look at which providers and hospitals take that specific policy. Search for providers from the major carriers here.
What is an Insurance Premium?The premium is the amount you pay to have an insurance plan. The cost will vary by person and if your income is below 400% of the Federal Poverty Level (FPL) you may receive subsidies from the government to reduce your cost. You pay your portion of the premium even if you don't use medical care that month. If you don't pay your portion of the premium the policy is canceled, doctors will want their money back and you can't sign up again until next open enrollment.
What are Doctor and Rx Co-payments?A co-payment is a fixed amount you'll pay for a medical service (doctor visit, emergency room visit, prescriptions) with the insurance company paying the remainder of the cost. For example, you may pay $25 for a visit to the doctor's office that would cost $150 if you didn't have a co-pay plan. After your co-pay, the health plan pays the balance of your charges including lab work or x-rays.. Some plans do not offer co-pays but rather have all medical expenses applied to the annual deductible. Carriers tend to charge much higher premiums for plans with co-pays, you should compare the cost/savings of more basic (HSA qualified) plans and consider a lower cost option saving the difference for when you do have claims.
What is an Annual Deductible?If you need medical care, a deductible is the amount you pay for care before the insurance company starts to pay its share of the medical costs. With many of the new plans most expenses (doctor, prescriptions, ER, etc.) will be applied to your deductible. Once you meet your deductible, your insurance company begins to cover some or all of the costs of your care. Some plans have lower deductibles, like $1,000, others have higher deductibles, like $3,000. Many plans are required to provide preventive services at no cost to you, even before you've met your deductible. It is important to note that even though you are required to pay 100% of the cost until you have met your deductible, you will receive large discounts on all of your care by using an "in network provider.
What is Co-insurance?Co-insurance generally follows your deductible and is similar to co-payments, except it's a percentage of costs you pay rather than a fixed dollar amount. For example, if you have a plan with a $1,000 deductible and 20% co-insurance, it would work like this for a $3,000 claim. You are responsible for the first $1,000 to meet your annual deductible. You are then responsible for 20% of the remaining $2,000 ($400) and the insurance company will pay the other 80%. This cost sharing ends when you reach your out of pocket maximum.
Two ways Insurance Coverage protects you from high medical costs:
Out-of-pocket maximumThis is the "worst case scenario maximum amount you'll have to pay if you get sick. This resets each year on your policy renewal (generally January 1st along with your deductible). For example, if your plan has a $3000 out-of-pocket maximum, once you pay $3000 in deductibles, coinsurance, and co-payments the insurance company will pay 100% for any covered care above that amount for the rest of the year.
Unlimited checkbookYour insurance plan has unlimited lifetime benefits on how much the insurance company will spend each year or over your lifetime to cover essential health benefits. After you've reached your out-of-pocket maximum, your insurance company must pay for all of your covered medical care with no limit.
People without health coverage are exposed to these costs. This can sometimes lead people without coverage into deep debt or even into bankruptcy. We hope this Tennessee Health Insurance 101 has given you answers to your questions.
Health Insurance Explained
Deductibles, co-pays & out-of-pocket explained
Choosing the right health plan
Who pays for health reform and subsidies?