Before you dive headfirst into the world of insurance, grab a trusted advisor or broker and a big cup of coffee. Read every document in sight and ask as many questions as you’d like. Think of it as a game of 20 questions, but with your health on the line. A good insurance plan can be like a knight in shining armor, protecting you from all the unexpected boo-boos life may throw your way.
Coinsurance
Imagine splitting a pizza with a friend. Coinsurance is like your share of the toppings. Most health insurance plans require you to pay a percentage of the healthcare costs, anywhere from 0% to a whopping 30%. This comes into play after you’ve met your deductible (more on that later).
Copay
A copay is a fixed fee that you pay every time you visit a doctor, get a prescription, or any other medical service. It’s like paying a cover charge at a nightclub, except you’ll never hear a good beat. Copays can vary depending on the service, but they’re usually around $30 or less.
Deductible
A deductible is like a threshold you have to cross before your insurance plan starts covering you. Let’s say John has a health insurance plan with a deductible of $1000. If he gets sick and goes to see a doctor, who charges him $150, John has to pay for that out of his own pocket because he hasn’t met his deductible yet.
Essential Health Benefits
These are the ten basic items and services that every health plan must cover, according to the Affordable Care Act (Obamacare). It’s like a menu of options you can choose from, but you can’t go wrong with any of them. They include emergency services, hospitalization, maternity and newborn care, mental health, prescription drugs, preventive and wellness, pediatric, outpatient care, rehabilitative services and devices, and laboratory services.
Flexible Spending Account (FSA)
An FSA is like a secret stash of money that your employer gives you to pay for out-of-pocket healthcare costs. The money is deducted from your paycheck before taxes, so it’s like getting a discount on your healthcare expenses. You can use FSA funds for copays, deductibles, certain medications, and medical devices.
Formulary
The formulary is like a shopping list of prescription medications that your insurance covers. It can change every year, so make sure your current medications are still on the list before switching insurance plans. If they’re not, you can ask for a formulary exception.
In-Network
In-network providers are like the cool kids at school that your insurance company has made friends with. They offer services at a discounted price, so you pay less when you use an in-network provider.
Out-Of-Network
Out-of-network providers are like the new kid in town that your insurance company hasn’t made friends with yet. You may have to pay more for services from an out-of-network provider.
Out-Of-Pocket Cost
Out-of-pocket expenses are like the costs of medical care that your insurance plan won’t cover. They include deductibles, coinsurance, copays, and any services that aren’t covered by your health plan. Your insurance company will also set a maximum amount that you’ll have to pay for medical expenses on your own, called an out-of-pocket maximum.
Out-Of-Pocket Maximum
Think of an Out-of-Pocket Maximum as your personal kryptonite against medical expenses. Once you hit this limit, your insurance is like Superman, ready to save the day and pay 100% of your healthcare expenses. This is the most you’ll have to pay for covered services each year and it includes deductibles, copays, and coinsurance for in-network services. So, if you’re someone who has a tendency to fall off cliffs and break bones, you may want to invest in a high out-of-pocket maximum to protect your wallet.
Premium
Your premium is the monthly fee you pay to your insurance company for your health insurance plan. It’s like a gym membership, but instead of a flat belly, you get peace of mind knowing you’re covered in case of any medical emergencies. You can choose to pay monthly, quarterly, or yearly, depending on your budget and how often you want to fork over your hard-earned cash.
Preventative Care
Preventive care is like a flu shot for your wallet. It’s care received to prevent illness, and thanks to Obamacare (Affordable Care Act), all plans are now required to cover preventive doctor visits and exams, patient counseling, screening tests, and immunizations at zero cost. So, no copays or coinsurance even if you haven’t met your deductible yet. This is great news for all the hypochondriacs out there who like to go to the doctor just to make sure they’re still alive.
Provider Network
Your provider network is like a secret society of healthcare providers who have partnered with your insurance plan to provide care at a discount. If you use one of these in-network providers, you’ll pay less because your insurance has negotiated a sweet deal with them. To find out if your favorite doctor is part of this exclusive club, just check with your insurance provider. And if they’re not, well, you’ll just have to go back to relying on chicken soup and leeches for your healthcare needs.
The Most Important Thing to Remember
Work with a good broker. I’m just saying this to make you a new client of ours. Even when I lived in Germany, I had a broker. Why? Because a good broker knows all the shortcuts that are available, the plans that fit you best, the ways to combine plans to maximize options, and the most important thing, he makes getting health insurance easy, and puts his knowledge to work for you when you run into issues, which can happen with any health insurance company.
If you have coverage and would like to have a free audit of your insurance plan, contact us and we’ll help you.
Sources:
- Healthcare.gov
- The Centers for Medicare & Medicaid Services (CMS)
- The Affordable Care Act (Obamacare)
