In order to work your way through the confusing health insurance marketplace, it’s tremendously helpful to know the basic health insurance terms.
Here’s an explanation of some of the most important terms in modern healthcare here in the USA.
1. For starters, what’s a deductible?
Basically, if you have a $1,000 deductible, your provider won’t pay until you have already paid for $1,000 worth of services on your own dime.
2. What services do not require you to meet your deductible first?
Preventive care is offered at no cost, according to Walsh.
Preventive care services include your annual physical, mammograms and generic brands of birth control, just to name a few.
3. Do you still have to pay for services, other than preventive care, once you meet your deductible?
4. What’s the difference between a copayment and coinsurance?
If you have a copayment plan, there is a set fee (your copay) that you have to pay out-of-pocket for services. For example, you may have a $75 copay for a trip to urgent care and a $250 copay for a visit to the emergency room. The fee is determined by your provider and varies depending on the service.
As for coinsurance plans, you have to pay a certain percentage of a service’s cost once you meet your deductible. So if your doctor’s office needs to be paid $100 for a strep throat test, and you have an 80/20 coinsurance plan, you will pay $20 and your provider will pay $80. Again, this kicks in only once you satisfy your deductible. If your deductible is not yet satisfied, you have to pay the full $100.
6. When it comes to choosing a plan, what’s the best bet for a generally healthy person?
There is no straight answer for this one. (Sorry!)
The lower your deductible is, the higher your premium will be — and vice versa. So, when choosing a plan, you should probably consider your financial situation and the status of your health.
Walsh warns that when choosing a plan, you have to assess the risk you are willing to take. “You can be healthy on Jan. 1 and get into a car accident on Jan. 2,” she said.
If you can afford a low-deductible plan, Walsh said “it may be worth it for peace of mind,” even if you consider yourself to be healthy.
Explore your options, ask questions and figure out what works best for your individual situation.
7. Premium? What’s that?
A premium is what you pay monthly, at least in most cases, just to have coverage. You will pay this premium regardless of whether you actually use your health insurance or not.
8. What’s a Health Savings Account?
A Health Savings Account (HSA) is just like any other savings account, except the money in it is reserved for medical expenses.
HSAs are available to taxpayers with qualified high-deductible plans. You control how much money you want to put into the account, and whatever you deposit is not taxed as long as the money comes straight from your paycheck. If the money is not coming directly from your paycheck, you can deposit it post-tax and then report your contributions when you file your taxes, according to Walsh.