You know all those really important skills that you should have learned in high school but never did? We talk tax returns, how to change a tire and how to budget; indeed Life skills that most of us will use far more often than y=mx+b. Perhaps one of the most important subjects removed from the curriculum was understanding a little thing called health insurance. If you feel like you’re way behind on this topic, you’ve come to the right place. Here’s your guide to understanding common health insurance phrases, where to get health insurance, and some key things to keep in mind when using your benefits.
Terms you should know
What is a deductible?
Your deductible is the amount of money you have to pay out of pocket in the year before the insurance benefits begin. Think of your retention as the points you must earn before you receive your next Abercrombie & Fitch reward. You spend x amount of dollars to save money on your next purchase!
Your deductible can range from $0 to $8,000, but in many cases ranges from $1,500 to $4,500. To cover your deductible, you use your health insurance card to visit a doctor, to fill in prescriptions, etc. You will then receive an invoice from your doctor and a so-called benefit notification (EOB) from your insurance company. This shows you that the claim from your visit has been processed by the insurance company and your payment has been used towards your excess. Not quite as exciting as receiving your A&F package, but still positive!
What is co-insurance?
Once you reach your deductible, the insurance benefits begin. This is the percentage that the insurance company will pay for a claim. This amount is generally between 50-100%. Let’s say your co-insurance is 70%. This means that after you meet your deductible, the plan pays 70% of claims received for covered benefits and you pay 30%. For example, if you have an insured claim of $100, the insurance will pay $70 and you will be responsible for $30. Isn’t it great when someone helps out for a change?
What is a co-payment?
A co-payment or co-payment is a predetermined amount that you pay for specific services. Typically, at the time of the visit, you will have a co-payment for prescription medication, doctor visits, and urgent care visits.
Prescription drugs generally fall under 3-4 tiers ranging from generic (or tier 1) to specialty drugs (tier 3 or 4). You may see tiers of prescription drugs like $10/$65/$95/$200 or a variation of that.
Office and emergency visits also often have set co-payment amounts that you pay in advance. You might see $25 or $50 for in-office visits and $75 or $100 for urgent treatments.
Note: Not all health insurance companies use co-payments. In this case, there isn’t necessarily a fixed flat rate, and you pay the cost of the medication or the doctor’s visit (too bad, we know).
What is an out of pocket maximum?
Your Out-of-Pocket Maximum (OOP) is the highest amount of money you pay for covered services under your health plan for the year. When you reach your OOP, you can consider the rest of your health insurance benefits “free” for the rest of the year.
The deductible maximum generally includes the previously met deductible plus any co-payments, but this may vary by plan. From the example above, if coinsurance pays the $70, the $30 you paid would go toward your deductible maximum. Once you reach your yearly limit, all covered services should be covered by the insurance in the future – this time in full.
What are preventive services?
A majority of health insurance plans are mandated by the Affordable Care Act, which means they follow ACA guidelines for preventive care. These are the coveted services that you usually receive once a year free of charge. General preventive benefits include routine vaccinations, blood pressure checks, cholesterol checks, and more. You know, everything you need to stay in tip-top shape.
Preventive services are often shared between demographic groups. There will be certain benefits specifically for women, children, or all adults. Some services, such as B. Colonoscopies require you to be of a certain age for the benefit to be considered preventive.
For a full list of preventive benefits, see click here.
Where can I get health insurance?
Congratulations, you are finally a real adult! Translation? You just turned 26 and your parents’ health insurance has kicked you out. Now the real fun begins.
When that time comes, the easiest (and generally cheapest) way to get health insurance is through your employer. Many employers will pay a portion of your monthly premiums, contribute to a health savings account for you, or (if you’re really lucky) offer free health insurance.
If you’re in the unfortunate minority and can’t get insurance through an employer, you can generally sign up for a policy the market/Exchange. All you have to do is meet all the requirements, be able to afford to sell your soul and deregister your firstborn. joking!
As long as you meet all the requirements, you can sign up for a marketplace plan yourself online or contact an individual health insurance broker for assistance.
When can I apply for health insurance?
You will want to get your insurance through an employer. When you start a new job, you generally have to go through a “waiting period” where you have to work for the company for a certain amount of time before you qualify for the insurance plan – this usually ranges from 0 to 90 days.
If you do not register as a ‘new hire’, ie within your waiting period, there may be restrictions on when you can. Typically, a qualifying life event must occur, also known as a major life-changing event such as losing insurance coverage elsewhere (example: coming of age / turning 26), getting married, having a baby, and more.
Typically, the only other time to sign up for occupational health insurance is during the open enrollment period. Most companies renew their health insurance plans on January 1st, so their open application deadline is the month of December. This is the period during which employees who previously waived (or did not elect) the group health insurance plan are eligible again and can enroll for an effective date of January 1st.
There are some cases where the insurance policy will be renewed at a different time, which will change the open enrollment period. Do your due diligence and consult your employer before taking our word as gospel.
If you are not seeking insurance through an employer and are looking at an individual or marketplace policy, you will likely have to wait for the annual open filing deadline or have a qualifying life event as well.
How much does health insurance cost?
Great question! We’d love to tell you, but the only answer here is that there is no answer. It is usually cheapest to sign up for a plan through your employer. As a rule, the employer pays part of your monthly premium. Your “premium” is the price you generally pay monthly to enroll in an insurance plan and receive insurance benefits.
I don’t want to be the bearer of bad news, but if you need individual health insurance, you’ll likely have to pay the entire monthly premium yourself. Based on your demographics and the wealth of benefits you choose, this can range from $100 to $400 per month. Take advantage of these preventive benefits to stay as healthy as possible and keep costs down!
things to consider
For more good news, it’s important to remember that insurance doesn’t cover all medical procedures as there are exclusions. Exceptions are things like dental services, cosmetic procedures, alternative medicine, etc.
There’s also a fun little thing called “pre-approval” that the insurance company often asks for before a major procedure. This means your doctor must pre-authorize or demonstrate to the insurance company that the procedure is “medically necessary” before they agree to cover the claim. This is something your provider’s office should be aware of, but we recommend not trusting anyone and taking care of it yourself beforehand.
It is also important to note that deductibles, co-insurance and deductible limits are generally reset annually. In many cases, this occurs on January 1st each year, but there may be variations.
Pro tip: If you need service that will result in you reaching your deductible, schedule it at the beginning of the year or right after your plan resets so your insurance benefits kick in and the insurance company pays part or all of the covered claims rest of the year. We, of course, do NOT recommend taking this advice for anything that is life threatening.
If you have questions about your health insurance benefits, what’s covered, or what you owe for covered benefits, bite the bullet and contact your health insurance company. Yes, you’ll probably have to wait an hour on hold, but most companies now at least have the option for you to leave a message and get a call back. This is one of those cases where it’s worth putting in a little extra work, I promise
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* This is just a summary. Please inquire with your health insurance company or an insurance specialist.