Health Matters

Health Insurance 101

New to health insurance? Need a refresher? Following are some terms and facts you should know.

Health insurance works by sharing the cost of health care between the insurer and the subscriber (policy owner). This cost sharing continues until the subscriber’s out-of-pocket maximum is met for the plan year. After that threshold is reached, the insurer covers 100% of the subscriber’s medical costs. Costs applied toward the maximum reset every plan year.

What You’re Responsible for Paying

Monthly premium: the amount the insurance costs per month Deductible: the amount you pay out of pocket before insurance pays for anything Copays: set payments you make for medical services; copays continue after you have met your deductible Coinsurance: the percentage of your medical bills you pay after the deductible is met, but before you reach the out-of-pocket maximum Note: Your monthly premiums don’t count toward your out-of-pocket expenses, but all other costs do.

What’s Covered

Covered services vary by plan. Typically, most plans cover inpatient and outpatient services, mental health services, and rehabilitation services. However, the services must be medically necessary, as determined by the plan you purchase. It’s important to review your plan’s coverage limitations. Plans typically do not cover cosmetic services, experimental services, off-label medications or services not considered medically necessary by the plan guidelines.

Insurance Types

Where you can receive healthcare services depends on what type of insurance you purchase and whether your healthcare provider participates. See below for details. Health maintenance organization (HMO): In this type of plan, you can only see providers in your network. A referral from your primary physician is required for a specialist. Preferred provider organization (PPO): PPOs are generally larger networks of providers. You may be able to see both in-network and out-of-network providers, but outof-network services will cost more. You can purchase additional out-of-network coverage, but you will still incur higher costs when seeking care from a nonparticipating provider. You do not need a referral to see a specialist. Point of Service (POS): In this type of plan, you can see both in-network and out-of-network providers. Out-of-network services will cost more. A referral from your primary provider is required for a specialist. Medicaid is a government program in which costs are shared by the state and federal government, with low costs or no cost to the subscriber. Medicaid programs also can be HMOs and require that the patient seek services at a participating provider or hospital. Providers and hospitals can choose not to provide Medicaid services, with an exception for services covered by the Emergency Medical Treatment and Labor Act (EMTALA), a federal law that requires anyone coming to any emergency department to be evaluated and stabilized, regardless of insurance status or ability to pay. Medicare (traditional) is a government system of healthcare insurance for people over 65 (or younger, with certain disabilities) that pays an average of 80% of healthcare costs. Subscribers can purchase a supplemental commercial plan to cover the 20% copay not covered by Medicare. For providers who accept Medicare, all services are considered in-network. Medicare Replacement or Advantage Plan: These plans feature both Medicare and commercial insurance benefits and requirements. They cover everything that traditional Medicare covers but also have additional benefits, such as dental and hearing coverage. Since the plans have commercial benefits, they follow commercial insurance requirements, including deductibles, copays and coinsurance. The plans can be HMO, PPO or Private Fee-For-Service (PFFS) and will require your provider to participate to be in-network. Out-of-network services will cost more, if allowed by the plan.