Health insurance is a contract between you and your insurance company that protects you from high, unexpected health costs. You either buy a plan on your own or choose one offered by your employer. The insurance company agrees to pay part of your medical costs if you become sick or get hurt. Simple enough, right?
Insurance can be confusing, but health insurance is a whole other ball game. Let’s break down the basics, so you can become a health insurance expert!
What are the different types of health insurance plans?
- Health Maintenance Organizations (HMO) – With this plan you can visit a select group of providers in particular geographic areas, usually at a lower cost. Beware though, if you receive care outside your network, you will be responsible for 100% of the cost, unless you received prior authorization from your provider, or your condition was considered an emergency.
- Preferred Provider Organizations (PPO) – With this coverage you can visit all providers in and out of your network, without authorization from your provider, but the benefits payable for an out-of-network provider may be lower. This coverage tends to have higher out-of-pocket costs due to the freedom of being able to see any provider.
- Point-of-Service Plan (POS) – The main benefit of choosing this plan is that you can select your own network. This may be a good option if you are looking for a standard plan that offers more flexibility than an HMO and costs less than a PPO.
- High Deductible Health Plan (HDHP) – Typically, this plan features lower premiums and higher deductibles than other insurance plans. This would be a good choice if you are reasonably healthy and rarely go to the doctor.
How does it work?
With health insurance, you pay some of your health costs and your insurance company or employer pays the rest. There are a few ways these payments break down:
- Premium is the amount you or your employer pays each month to continue your health insurance coverage.
- Deductible is the amount that you pay each year toward your medical costs before the insurance company begins to pay their share.
- Copayment is the flat amount you pay for certain medical expenses, such as visiting the clinic that is not put toward your deductible for the year.
- Coinsurance is the amount you pay to share the cost of covered services after your deductible has been paid.
Special Enrollment Period
If you happen to miss an open enrollment period to sign up or change health insurance, you may qualify for a special enrollment period. If at least one of the life events below pertain to you, then you would be eligible for a special enrollment period.
- Marriage or divorce
- Birth, adoption, or placement of a child for adoption or in foster care
- Permanent move: To a new residence where your current plan doesn’t provide coverage.
- Gain U.S. citizenship or leave incarceration
- Indian tribe member: Members of federally recognized Indian tribes can sign up or change plans once per month throughout the year, in the Marketplace only.
- Loss of other health coverage: Any loss due to loss of job-based coverage, the end of an individual policy plan year in 2014, COBRA expiration, aging off a parent’s plan, losing eligibility for Medicaid or CHIP, and other similar circumstances.
Rider, drug formulary, premium, and out-of-pocket … HUH?
Health insurance terminology and definitions can be difficult to comprehend, so be sure you brush up on your terminology before your next doctor visit or claim arrives in the mail.
Claims are too confusing!
The above information only touches on the basics of health insurance. There is always more information available to you through WPS’ free learning center, at your fingertips 24/7. This learning center provides a vast amount of information such as more health insurance basics, tips on controlling health insurance costs, and making wise health decisions. HealthCare.gov is also a valuable resource explained in simplistic terms for easy understanding.
So let us know! Did you learn something new about health insurance? Is there a topic you still don't quite understand? Leave us a comment!