Understanding Common Insurance Terms
By: Rachel Quinn
Open enrollment is an important time for many Americans, especially those with health related issues. This short window of time is when everyone has the opportunity to enroll in a Marketplace Health Insurance Plan also known as, Affordable Care Act coverage, to some. This can be a difficult process for individuals who are not educated on the terms used when discussing health insurance plans. Here are a few important terms you should know before going over your health insurance options this upcoming open enrollment.
A premium is the amount that you pay each month/quarter/year to be a member with your insurance carrier, but this payment only binds you to the insurance carrier. This money you spend does not go towards the deductible or out-of-pocket maximum.
The deductible is the amount of money you will have to pay before your insurance carrier starts sharing some of the costs for some of the services you require. If your deductible is $1000, your carrier may not start sharing costs with you until you have paid this amount. Luckily, most plans cover preventative care visits before you have met your deductible. You should review your plan benefits thoroughly before seeking services, as not everything may be applicable towards your deductible.. Once your deductible for the year has been met, your insurance begins sharing the cost of services you need with you, this is called coinsurance. Coinsurance is when you share the cost of service with your provider. For example:
Your coverage may be a negotiated responsibility of 20/80. This means that after your deductible for the year has been met, you pay 20% of the price for applicable services received and your insurance will pay the other 80%.
There is a limit, however, to how much you will have to pay for your health care throughout your plan year. This amount is known as the out-of-pocket maximum (OOPM) and you will never have to pay more than your out-of-pocket maximum for services during your policy term. Once your OOPM is met for the year you will no longer have to pay coinsurance and your carrier will cover applicable services 100%.
Another important thing to look for when purchasing your Marketplace Health Insurance plan is what type of plan it is. There are several kinds of health insurance plans made available to individuals on the marketplace. The most common types of plans are PPO,EPO, and HMO.
A Health Maintenance Organization or HMO operates on a network of healthcare providers and facilities that are contracted directly with your insurance provider. This means your selection of providers will be narrowed down to those who are contracted or work with your specific insurance carrier. HMO’s often focus most on prevention and wellness, and generally these plans do not offer coverage out-of-network unless it is an emergency. Under an HMO plan you will typically need a referral from your primary care doctor to see a specialist.
A Preferred Provider Organization or PPO is very similar to an HMO in that it runs on a network of healthcare providers and facilities who are contracted with the insurance carrier. The major difference here is that this plan allows you to see a provider that is out of network for an additional cost. If you see an out-of-network provider under this type of plan, it also involves more paperwork to be filled out. You must first pay the provider for services rendered and then file a claim with your insurance carrier to get you money back.
Lastly, an Exclusive Provider Organization or EPO, is similar to the first two we talked about but this type is a managed care plan where you can only see providers in the plans network. This means if you have to see an out-of-network provider you will be paying full price out of pocket. You do not have to have a referral to see a specialist under this plan like you do in an HMO, and there is generally overall a moderate amount of freedom when it comes to finding a provider.
Hopefully now with this new information you can go into your healthcare enrollment with a little less confusion and a lot more confidence. As always American Exchange values each client we assist on their journey to affordable healthcare, and we are always available to answer your questions in real time. Please reach out to us for your healthcare concerns and questions by calling 423-424-0586, or by emailing email@example.com.