Ah, so you have finally decided to buy a health insurance for yourself and the family. Health insurance can actually become very confusing with a host of plans and clauses attached. There are almost more than 20 terms that you are required to understand in order to figure out which health insurance plan actually suits your budget and needs.
Let us take you through the most important terms here. This piece of content will help you understand 8 key terms and their concepts in the health insurance industry. Once you understand what these 8 terms signify, you will easily be able to decide what sort of plan, with what kinds of subsidies can actually cover your health care requirements.
In 2010, the total population of America was 308,745,538 or ~309.0 million. The number of people with some sort of health insurance coverage was 256.6 million, about 83.7% of the total U.S. Population, in 2010. On March 23, 2010, a new policy was implemented by the U.S. Federal Government called Patient Provider and Affordable Care Act (PPACA) or Affordable Care Act (ACA), most commonly known as ACA. This act tried bringing all Americans under the umbrella of health insurance coverage. The aim of ACA was to make health care affordable for every single citizen and legal immigrant of America.
Even those who could not afford healthcare coverage were given various subsidies and facilities that enabled them to get themselves covered by one plan or the other. According to the 2014 Kaiser Foundation study, the population of the USA grew to 324,227,000 or 324.2 million in 2014, out of which more than 291.2 million U.S. population or 89.6% had a health insurance plan for themselves. ACA makes it mandatory to have some kind of medical health coverage or pay tax penalties for it.
The first time you avail some medical service, your insurance won’t start covering for you instantly. You are initially required to pay out-of-pocket for your health care before your insurance starts covering you. Even if you have been regularly paying premiums, you are required to make initial contributions, certain fixed amount without any outside help. This is the amount with no contributions from the insurer’s end.
Once you have paid the deductibles in your plan, your insurance company will chip in money into further medical care as coinsurance.
- In 2015, the maximum out-of-pocket for a single individual was $6,600, while for the family, the threshold was $13,200. However, you will not be entitled to any subsidies until you have paid the above-mentioned sum towards deductibles.
- In 2016, the maximum cost towards deductibles has become $6,850 for an individual, while the family plan has the maximum limit as $13,700.
So, you now have health insurance coverage and you need to go visit a physician. Do you think your entire medical expenditure will be covered by your insurer? You will first need to pay a fixed amount that has been put down as copay in your health insurance plan. Usually, every plan will mention a fixed sum that the enrollee has to pay first before the insurance provider comes to help. This fixed amount is called copay and is mentioned in your plan.
Once you have finished the number of times assigned for certain covered services mentioned for copayment, you will be taken to other offers. However, the first amount that you will contribute with your insurer is copay. There are usually certain limits assigned for copay, the number of times you will be entitled to a certain medical service.
It is really important for you to know the amount of copay you are receiving from your insurer. You must, moreover, emphatically find out which drugs your plan covers under the mentioned copay. It is good if your in-network coverage has a copay option. It will help you reach to an annual deductible much faster than without it.
Within your health insurance coverage, there are certain amounts as deductibles assigned for you that you need to pay. Once you have reached the limit of your deductibles, you will have to share a portion of your health insurance cost towards payment. This amount that you pay after your threshold for deductibles is reached gets termed as coinsurance. Coinsurance is not a fixed cost like your copay, where you do not typically need to meet your deductible.
In coinsurance, once your deductibles are met, you will need to pay for further medical services with your insurer. Coinsurance is usually a percentage of the total cost that you use for your prescription drugs and other health-related needs. Within ACA, preventive services like annual visits to your doctor and vaccinations are not covered under coinsurance. However, once you are required to pay more amount than what’s been stipulated for preventive services, you can choose coinsurance.
In case you work for a company with more than 50 employees, the group health insurance plan under ACA will essentially cover you and your family. However, under certain circumstances where you may lose your healthcare benefits, COBRA comes to your rescue. Consolidated Omnibus Budget Reconciliation Act, aka COBRA, protects you through the Federal law and enables you to retain your employer-based healthcare coverage.
COBRA provides you protection for an extended period of 18 months in case:
- You quit or lose your job
- Your employee is dead
- You are not a dependent any longer as you are more than 26 years
However, COBRA works only with an organization having 20 or more employees. Some religious organizations and federal plans do not fall under COBRA. Also, in case you opt for COBRA, you will pay both the premium share- your amount and your employer’s share also. If you are using the COBRA option, you cannot use it after 18 months from the last date of your termination.
You must be aware of the health screening before you are provided any health insurance coverage. Prior to Affordable Care Act, if the enrollee was diagnosed with symptoms of certain illnesses, health insurance was not provided for those illnesses. However, post implementing ACA, any insurer cannot refuse coverage based on pre-conditions. In case you have some illnesses even before you had an insurance plan, you can no longer be refused health care coverage. Moreover, under the pre-existing condition, women can no longer be charged more than men i.e., double the sum.
However, there is one exception to this condition. If you are under individual health coverage plan “grandfathered”, pre-existing condition applies. Let’s say, you purchased the health insurance plan for you and family before March 23rd, 2010 and certain essential services have not been changed, denial to pre-existing conditions stand valid. The plan purchased before ACA was officially implemented may increase cost and reduce benefits.
- Preventive care services
There are various health related precautions that every individual needs to take to prevent certain diseases. These are medically termed as preventive care services. ACA requires that the preventive care services are provided without any out-of-pocket payments. These diagnoses include vaccination, immunization, tests, screenings and intravenous shots plus a completely free wellness trip to the doctor once every year.
However, some services do not come under the preventive service domain, which implies that the private hospital may need to share the entire health insurance amount in terms of screenings, vaccines, shots, etc. Of course, all these services can also be used through coinsurance or cost sharing.
- Health insurance marketplace
To understand to buy health insurance plan, you need to compare different prices provided for these plans. So that every enrollee is given the right kind of plan with adequate subsidies, certain health insurance websites have been created. Every state will provide its price list for different plans, subsidies, Medicaid, Medicare and CHIP rates for the consumer to check. These places are called health insurance marketplace, where each and every plan and other benefits of the health care industry is provided for the consumer to shop easily.
Even though the 8 terms here will help you get a basic understanding of health coverage, it is better you consult an experienced insurance agent or consultant to learn more. Please contact TrueCoverage at 1-888-505-1815 to speak to our licensed insurance agents.