Health Insurance 101
Health insurance coverage is complicated. We can help! Start here with Health Insurance Coverage 101.
Need more help after this refresher? Members can access our health insurance coverage specialist in our forum and receive direct help with their own questions, as well as receive help with denials and appeals. Whatever you do, don't give up! Most denials are reversed with the proper steps.
Healthcare lingo is complicated. Negotiating the slew of acronyms and information can be infuriating.
Not knowing how your plan works can cause confusion and cost you a significant amount of money.
All health insurance works basically as follows: In exchange for a monthly premium, you can visit a provider (doctor/hospital/physical therapy, etc) and your insurance company will pay for what they think it should cost. Most of the time, there isn’t much of a disparity between the provider’s billing and what the insurance company considers appropriate, but keep in mind that the insurance company basically reserve the right to pay (or not as the case may be) for whatever part of the bill they want. Either way, if you get hit by a car, fracture fifty bones, and need facial reconstructive surgery, those pesky thousands in premiums just saved you somewhere around a million bucks.
To slightly complicate matters, most insurance plans require a deductible, a co-pay, or both. A deductible is the predetermined amount that you have to spend on medical services in a given year before the insurance company starts paying. The lower the deductible, the higher the price of the plan, because your insurance is basically agreeing to pick up a larger portion of the bill.
Then the co-pay comes in. Basically, health insurance companies hate giving away anything for free and make you pay a small amount (between $105-$50 usually) for seeing a doctor after you’ve already gone over your deductible. You’ll often pay a higher co-pay for a specialist, urgent care or emergency room care. Often ER care has the highest co-pay to encourage you to use your doctor or urgent care centers when at all possible.
Most insurance companies cap the amount of out-of-pocket expenses you will have to pay and also put a maximum on the amount they will cover. Nowadays, almost every company or individual insurer has to choose between a number of different plans called Managed Care, each of which has its own acronym that doesn’t correspond in any way to what the plan offers.
Managed care is a system of health insurance that helps insurance companies make money while placing limits on the doctors/providers and services a member can use. There are several types of Managed Care Organizations, each with an acronym. Including HMO, PPO, POS, and EPO. Whichever on you choose, you are going to want to find the right primary care physician (PCP). Your PCP can help you determine which specialists you see, support any claims you have for services the insurance company wants to deny. Thus the PCP can greatly influence the quality of the care you receive.
In an effort to keep costs down, Health Maintenance Organizations (HMOs) place restrictions on the services a patient may receive. Under an HMO, the policyholder chooses a primary care physician (PCP) from the HMO’s list. After you choose your PCP, you must visit them for any medical issue. The PCP then decides whether your ailment is bad enough to warrant visiting a specialist. But you are only covered if you see a specialist that is part of your plan. This system keeps costs (and your premium) low, but can be annoying if you want to skip the step of visiting our PCP.
Preferred Provider Organizations (PPOs) give you a choice of where to receive services, with the possibility of paying more out-of-pocket depending on where you choose. If you have a problem, usually you can go straight to the specialist without first getting approval from your PCP (always check with your insurance company first to see if you can directly go to a specialist). If that specialist is a member of the PPO, insurance covers a much higher percentage of their services. However, if you don’t like their specialists and want to see the best surgeon in the area, who happens not to be a member of the PPO, you will still be covered for a certain percentage of the visit.
Ultimately, going out-of-network for medical services can cost you thousands of dollars in expenses that you could have avoided. Unless you are very uncomfortable with the choices given, there is no reason not to stay within your network.
Point of Service (POS) plans are essentially a merger of HMOs and PPOs. Like an HMO, you choose a PCP and visit them for referrals. Once a referral is made, you can choose to stay within the network, or venture outside and pay more out-of-pocket, just like with a PPO. Sometimes, you can even skip the visit to your PCP if you know the out-of-network specialist you would like to visit.
An easy way to understand an Exclusive Provider Organization (EPO) is to think of it as a PPO with restrictions, thus often costing less in premiums than a PPO. The list of providers you can visit is much smaller than with a PPO, and if you go out-of-network your services may not be covered at all (except in emergency cases). Seriously consider whether an EPO is worth the savings, the selection of providers is small, and if you need to go out-of-network you may have to cover the entire bill.
Important terms to understand and review on your specific health insurance plan
Annual Deductible: The amount you pay for covered health services before you are eligible to receive benefits.
$700 per Covered Person per calendar or plan year, not to exceed $2800 for all Covered Persons in a family.
Couples with no children have a $1400 In-Network deductible ($700 x 2).
Couples with 1 child have a $2100 In-Network deductible ($700 x 3).
Couples with 4 children have a $2800 deductible, as would couples with 6 children.
This is because the MAX deductible in this plan is $2800 for all Covered Persons, regardless of how many are in the covered family
$2800 per Covered Person per calendar or plan year, not to exceed $11,200 for all Covered Person in a Family.
Couples with no children have a $5600 Out-of-Network deductible ($2800 x 2)
Couples with 1 child have an $8400 Out-of-Network deductible ($2800 x 3).
Couples with 4 children have an $11,200 Out-of-Network deductible, as would couples with 6 children.
This is because the MAX Out-of Network deductible in this plan is $11,200 for all Covered Persons, regardless of how many are in the covered family
Out-of-Pocket Maximum (OOPM):
The maximum you pay out of your pocket in a calendar or coverage year for co-payments. Most health insurance policies renew every 01/01 of each year. But some policies such as for school systems may renew every 08/01.
$2000 per Covered Person per calendar or plan year, not to exceed $8000 for all Covered Persons in a family.
Couples with no children have a $4000 In-Network OOPM ($2000 x 2).
Couples with 1 child have an $6000 In-Network OOPM ($2000 x 3).
Couples with 4 children have an $8000 In-Network OOPM, as would couples with 6 children.
This is because the MAX In-Network OOPM in this plan is $8000 for all Covered Persons, regardless of how many are in the covered family.
$4000 per Covered Person per calendar or plan year, not to exceed $16,000 for all Covered Person in a Family.
Couples with no children have a $8000 Out-of-Network OOPM ($4000 x 2)
Couples with 1 child have a $12,000 Out-of-Network OOPM ($4000 x 3).
Couples with 4 children have a $16,000 Out-of-Network OOPM, as would couples with 6 children.
This is because the MAX Out-of Network OOPM in this plan is $16,000 for all Covered Persons, regardless of how many are in the covered family
When covered health services are received from non-network providers, eligible expenses are determined based on either the Fee(s) that are negotiated with the provider OR the Available data resources of competitive fees in the geographic area.
NOTE: If care is received from a non-network physician, facility, or other health care professional you will incur greater financial expense compared to an in-network provider. Your plan only pays a portion of those charges and it is your responsibility to pay the remainder. Youa re required to pay the amount that exceeds the allowable amount, which could be significant, and that amount does not apply to the Out-of-Pocket Maximum. It is recommended that you ask the non-network professional about their billed charges and/or negotiate what you will need to pay BEFORE you receive care. Some physicians will perhaps agree to accept in-network fees plus you cover 10% of remaining fees. Get any negotiated agreement in writing before receiving care.
Maximum Plan Benefit:
The maximum amount your plan will pay for non-network care during the entire period of time you are enrolled under the plan. (PLEASE NOTE: Removal of lifetime plan maximums are part of the Healthcare legislation recently approved. Refer to any new plan booklets or summaries to see the outcome of the provision change).
The percentage of eligible expenses you are required to pay for covered health services after you meet the annual deductible.
For example, you may be provided two options when enrolling in the insurance plan, such as:
90% of eligible expenses after satisfying $700 deductible until Out-of-Pocket maximum is reached, OR
70% of eligible expenses after satisfying $1400 deductible until Out-of-Pocket maximum is reached.