Health insurance can be confusing! With the number of options available when choosing a health insurance plan, it’s no wonder people get lost in the jargon. Here is a helpful guide to assist you through the maze of choosing a health plan.
Our health insurance advisors make this process even easier by providing the best options for your scenario—whether it’s a health insurance plan, Medicare, or non-insurance option like Medi-Share.
The amount you pay each month to be enrolled in your health insurance plan is called a premium. If you are comparing different plans, the monthly premium is one factor to consider. Plans with richer benefits have higher premiums, while plans with more basic benefits and higher deductibles have lower premiums.
Your plan’s deductible might be its most important feature. This is the amount you are responsible to pay before the insurance company steps in. For example, if you have a $2,000 deductible, you are expected to pay the first $2,000 out of your own pocket. Once you have paid $2,000 in a calendar year toward covered services, the insurance company will start helping out.
If you have a family, you each likely have an individual deductible as well as a family deductible.
Higher deductibles = lower premiums. Lower deductibles = higher premiums.
What happens after you’ve reached your deductible? Your health insurance plan spells out what percentage of covered health care services you pay for, and what percentage the insurance company pays for.
This is called coinsurance. A typical breakdown of coinsurance is 80/20—the insurance company pays 80% of the bill and you pay 20%. Again, this is after you reach your deductible.
It’s nice to know that your health insurance plan has an annual out-of-pocket maximum. This is the most you will be expected to pay for covered health services in a year. If you’ve incurred a lot of health expenses, you’ve likely paid your full deductible, copays, and co-insurance. Add these all up to see how close you are to hitting your out-of-pocket maximum.
Unfortunately, your monthly premiums don’t count toward your out-of-pocket maximum.
Have you ever visited the doctor and ended up paying $20 before leaving? This was a copay. Your copay amount (if any) is printed on your insurance ID card. It’s a flat fee that you pay each time you go to the doctor.
- High Deductible Health Plan
A high deductible health plan (HDHP) is a health insurance plan with a higher than normal deductible. HDHP’s have grown in popularity because of their lower monthly premiums and the ability to use a Health Savings Account.
A Health Savings Account (HSA) is an account that you can contribute to on a pre-tax basis to pay for qualified medical expenses. You can only contribute to an HSA if you are enrolled in an HSA-eligible high deductible health plan.
For a deeper dive into HSA’s read our blog here.
A Health Maintenance Organization (HMO) is a type of health plan that restricts coverage to care from doctors that contract with the HMO. Using a doctor not in the HMO network is not covered (except in an emergency). Some HMO’s require you to select a primary care doctor to act as the “quarterback” for the treatment and care that you need.
A Preferred Provider Organization (PPO) is generally more flexible than an HMO. A PPO has a network of providers where you will pay less than if you saw a doctor not in the network.
- Health Insurance Marketplace
Also known as the Health Insurance Exchange, this is the website where you and your agent can look for health insurance plans that are available in your area.
These plans are offered under the Affordable Care Act (ACA), known as “Obamacare”.
Medicaid and the Children’s Health Insurance Program (CHIP) provide health coverage to individuals and families under certain income thresholds—often at no cost or low cost.
If you are applying for a health plan on the Health Insurance Marketplace, you might be directed to your state’s Medicaid agency if it looks like you might qualify based on your family size and income.
- Subsidy/Premium Tax Credit
The Premium Tax Credit (also known as a “subsidy”), is a tax credit that can lower your monthly premiums. If you (or you with the help of your agent) obtain a health insurance plan through the Health Insurance Marketplace, you will be asked to estimate your income for the year. Your income (as well as family size) help determine if you qualify for the tax credit.
If your income ended up being higher than you expected, you might owe some money on your taxes since you received too much subsidy during the year. This is why it’s important to communicate with your health insurance agent about any change in income you receive during the year.
Health plans offered in the online Health Insurance Marketplace are categorized in four classes: bronze, silver, gold, and platinum. Benefits get better as you climb up the categories, with platinum often offering the lowest deductibles and coinsurance (also with the highest premiums).
Sometimes a treatment or medication needs approval from your health insurance company before you receive care. This is called “prior authorization” and typically happens if there is a complex treatment that’s recommended.
Find the right type of health plan for you
The key with health insurance is finding the right balance of monthly cost and out-of-pocket expenses. That can be difficult to do when you’re presented with a slew of different plans, all with different deductibles, co-insurance, and benefits.
If you are searching for the best health plan, schedule an appointment with one of our advisors.