Fall brings Halloween, pre-holiday anxiety, and end of semester blues, but it also brings something far scarier for some – Health Insurance Open Enrollment time. Having worked in the healthcare industry for over 16 years, (which is puzzling, because I am so very, very young) I have encountered many questions, concerns, and outright FREAK OUTS regarding health insurance coverage. No shame in asking questions, it’s complicated and there’s a lot to understand, but you may not even know where to start!
Here are some (hopefully) helpful tips and terms, and how they may apply to you and your family:
What you are paying:
1.) Premiums:
Definition – Your monthly baseline payment for your insurance coverage. (if you get your healthcare from your employer, this is usually deducted from your paycheck)
Why this matters: You are going to pay this whether you go to the doctor or not, so this figure must be manageable for your budget. This will vary according to factors such as who you are covering, which plan you choose and how much you make.
Insider’s tip: You will almost always pay less if you and your spouse both work and each elects your employer coverage.
2.) Copayments:
Definition – Copays are a flat payment that you make to the provider.
Why this matters: If you and your family are relatively healthy, and you see these numbers looking “reasonable” ($5-30 for a primary care physician/family doctor/internist; $15-45 for a specialist) this may be the most important factor in choosing your plan. Some of the larger numbers below can be daunting, but if you are not pregnant, or don’t have any chronic illnesses, this is an important thing to consider.
3.) Deductible:
Definition – The amount you (as the insured) must pay to your provider before your insurance company starts to share the costs.
Why this matters: Insurance plans sometimes keep this number high to keep your premiums low. This won’t usually apply to office visits, labs, or “basic” testing (x-rays, labs), but it usually DOES apply to advanced imaging (CT, MRI, PET scan), outpatient surgeries, and inpatient stays.
I like to describe this to patients as a bet. If you have a $2500 deductible, you are betting $2500 that you won’t get sick. If you need a CT or outpatient surgery, you lose and you have to pay up. Your deductible is for the whole year and resets the next.
Insider’s Tip: If you have met your deductible, and ESPECIALLY your MOOP (see below), and you have “year” left, get things done! Get that bunion surgery you’ve been putting off, see about that weird lab test your mom is always reading articles about, ask your PCP if it’s time for your (gulp) colonoscopy!!!!
4.) Coinsurance:
Definition – The amount that you pay after the deductible is met. It’s usually a percentage. Your insurance company will pay the larger share, but you could still pay 10, 20, even 40% of the total cost.
Why this matters: Ok, this is where it starts to get complicated. Even after you meet your deductible, you may still be responsible for a portion of the total cost of treatment. Often, you won’t have any way of knowing precisely how much this will be for any given health service. This number is very important if you or one of your family members is chronically ill, or even if they are due for routine surgery or tests.
5.) Maximum Out Of Pocket:
Definition – The most money that you, as the insured, will pay in a year.
Why this matters: If (God forbid) you or one of your family members becomes very ill, the deductible and coinsurance can add up very quickly. A maximum out of pocket limit (or MOOP) can help prevent huge financial problems in addition to health problems.
For example, You end up needing chemotherapy treatments (again, God forbid) at a whopping $20,000 a session. If your MOOP is $13,500, you have a $2500 deductible and a 20% coinsurance, with, you WILL NOT end up paying more than $13,500 in a year. (This MAY NOT include prescription costs)
What you are getting:
Health insurance!
Insurance plans rely a lot on their network – that is, the group of doctors and hospitals they contract with. This “in-network” group offers a discount to the insurance company. Your insurance company then passes those discounts to you. So, if your doctor or hospital is “in-network,” it will be cheaper for you. You may still go to an “out-of-network” doctor or hospital, but you will pay more.
Also, your insurance company is trying to limit costs. You will typically pay less for a plan with more restrictions, and more for a plan with fewer restrictions (therefore more choice). Ready? Here we go:
6.) HMO (Health Maintenance Organization)
Definition – An insurance plan that requires you to have a primary care physician. A “closed access” plan requires you to have a referral from your primary care physician before seeing a specialist, but an “open access” plan does not. You will usually only be covered “out of network” on an urgent or emergent basis.
Why this matters: if you see your specialist (not usually including OB/GYN for women) more than your PCP, you are going to want to make sure your plan is open access. If you are healthy as a horse, closed access may be fine for you.
7.) PPO (Preferred Provider Organization)
Definition – A plan with a “preferred” network of physicians, but also covers out of network benefits for routine services.
Why it matters: If this type of plan is a must for your family, chances are this whole post is pretty darn basic to you. This is really for people who are quite savvy, healthcare-wise, either because they are healthcare providers themselves or have been exposed to the industry and want to keep many options open to see the widest possible pool of practitioners.
8.) POS (Point of Service Plan)
Definition- A plan with a network of providers and out of network benefits.
Why this matters: POS is what happened when PPO and HMO had a baby. You will have lower costs to see an in-network provider, but if there is a specialist you are willing to pay a little more to see, this can be a “best of both worlds” type of scenario.
Lagniappe: Some employers offer different types of savings accounts to help defer your healthcare costs. These are separate from your insurance plan.
9.) HRA (Health Reimbursement Account)
Definition – Employer-funded health benefit plan.
Why this matters: This is used by companies to help employees with healthcare expenses and is not usually portable if you move jobs.
10.) HSA (Health Savings Account) and FSA (Flexible Spending Account)
Definition – both are a savings account that allows you to save money “pre-taxes” for eligible healthcare expenses.
Why this matters: Some things may not be eligible that you feel should be (i.e., OTC drugs, non-prescribed splints, etc). Also, some of these utilize a debit card to pay expenses at the point of service, but others require you to pay initially and submit a claim to be reimbursed.
Important differences – Pay careful attention!
HSAs are only offered with high deductible plans. The funds in your HSA are yours, and they usually roll over year over year.
FSAs are offered with other plans. You may have to use all funds before the end of the coverage year or you lose them, but these funds can often be applied to childcare, as well.
Insider’s tips for all plans:
- Most plans follow a “calendar year” (Jan-Dec), coverage wise, but pay attention. The plan year could be July-July or any other month.
- If you think you might (want to) get pregnant next year, make sure maternity is covered, or if you have an individual plan and have to add it – ADD IT! This will save you lots of headaches, phone calls, and screaming matches – you’ll get enough of those with the baby.
- Don’t just elect whatever coverage your co-worker is getting. Every family’s needs are truly different, both in terms of coverage and cost.
- If you are married, or otherwise able to be covered by your partner’s employer coverage- sit down with BOTH of your benefits and determine which plan fits your family better.
This list is by NO MEANS comprehensive, and hopefully, it doesn’t raise more questions than it answers. Truthfully, all the healthcare players (both providers and insurance companies) change the rules and terms so often, it’s hard to keep up. And I have explained these exact things to CEOs, school principals and even (yep!) doctors.
Whatever coverage you elect for your family, good luck and good health to you in 2020!
Another piece of advice: talk to an insurance agent. This is so much information to understand. They can help you and at no extra cost to you. They are paid by the insurance companies.