Health Insurance Essentials: Plans & Accounts
Read the plan language carefully to understand whether or not the plan you are purchasing requires a doctor’s referral to see a specialist and any additional costs related to doctors who are “out-of-network”.Many developed countries have some form of universal healthcare or government-funded healthcare system (socialized healthcare).
In the U.S., there isn’t a single national healthcare plan. The cost of your care depends on things like your income, the kind of medical help you need for your eosinophilic condition, and the type of health insurance and additional healthcare accounts you have.
Different Types of Health Insurance
Health insurance is like an agreement between you and your insurance company where you pay a premium and the insurance company helps cover your medical costs. Health insurance in the U.S. is typically offered through your employer or school, purchased on your own, or is provided through the government.
Employer-Sponsored Health Insurance:
If you have a job, your employer might offer health insurance as a benefit. Both you and your employer usually pay a part of the cost. The policy language and coverage terms of these plans can change year to year, therefore, make it a point to re-review any changes during the renewal period.The exact timing may vary depending on the insurance company and policy terms.
Individual Health Insurance:
If you don’t have insurance through work, school, or the government, you can buy your own plan. The cost depends on things like your age, health, income, and how much coverage you want. These plans can be purchased privately from marketplaces such as HealthCare.gov.
Medicare and Medicaid:
Medicare and Medicaid are the main government-sponsored health coverage plans. Medicare helps older people and those with disabilities. Medicaid is for people with low incomes. There are also other government plans for specific groups, like military members and veterans.
TRICARE:
TRICARE is a healthcare program managed by the Defense Health Agency that provides medical benefits to U.S. active-duty service members, retirees, and their dependents, as well as some members of the National Guard and Reserve, survivors, and certain former spouses worldwide.
Key Terms to Know When Shopping for Insurance:
The following terms are important because they directly impact how much you pay when using your health insurance.
Premium. A premium is the amount of money you pay regularly (usually every month) to have health insurance. You pay it whether or not you actually use any medical services. Think of it like a membership fee: You’re paying to keep your insurance active, even if you don’t go to the doctor or use any health services that month. So, the premium is the cost of staying “in the club,” while other terms below determine how much you pay when you need to see a doctor.
Deductible. A deductible is the amount of money you must pay out of pocket for your medical expenses each year before your insurance starts helping with costs (beyond co-pays). For example, if your deductible is $1,000, you’ll need to pay $1,000 on medical bills first. After that, your insurance will kick in to cover more of your expenses, often requiring only co-pays or co-insurance.
Co-pay. A co-pay is a fixed amount of money you pay each time you visit the doctor, pick up a prescription, or have a procedure done. For example, if your co-pay for a doctor’s visit is $20, you will need to be prepared to pay that amount at the appointment, and your health insurance covers the rest of the bill. Co-pays will vary depending on the insurance plan.
Co-insurance. Co-insurance is a percentage of the medical bill that you are responsible for paying after you’ve met your deductible (more on that next). You and your insurance share the cost of a medical bill, but you’re only responsible for a specific portion. For instance, if your co-insurance is 20%, and you have a $1,000 medical bill, you’d pay $200, and your insurance would cover the remaining $800.
In-network. In-network refers to doctors, hospitals, and other healthcare providers that have a contract with your health insurance company. This contract means they’ve agreed to provide services at lower, negotiated rates, saving you money. You get a better deal when you stick with places that are “approved” by your insurance.
Out-of-network. Out-of-network refers to healthcare providers that don’t have a contract with your insurance company. Because they’re not part of your plan’s network, their services are usually more expensive, and you may have to pay a larger portion—or even the full cost—of your medical bills.
Out-of-pocket maximum. The out-of-pocket maximum is the most you’ll have to pay in a year for your healthcare costs. After you reach this amount, your insurance covers 100% of covered services for the rest of the year. This includes your deductible, co-pays, and co-insurance but doesn’t include your monthly premium.
Example in Action:
Let’s say you have health insurance with the following details:
- Monthly Premium: $200
- Deductible: $1,500
- Co-insurance: 20%
- Co-pay: $20 for doctor visits
- Out-of-pocket Maximum: $5,000
- In-Network Coverage: 80% of costs after deductible
- Out-of-Network Coverage: Not covered unless it’s an emergency
You visit a doctor because of stomach pain. Here’s how these terms might apply:
- You’ve been paying a monthly premium of $200 per month just to have insurance, so your policy is active when you need it. This cost does not go toward your deductible or any specific medical bills.
- You check your insurance plan and choose an in-network doctor. This ensures you’ll pay less since the doctor has negotiated rates with your insurance. If you had gone to an out-of-network doctor, your plan wouldn’t cover any of the costs (since it’s not an emergency), and you’d pay the full bill yourself.
- The total cost of your visit, including tests, comes to $500. Because you haven’t met your $1,500 deductible yet, you’re responsible for the full $500. This amount gets applied toward your deductible for the year.
- Later in the year, you need a $10,000 surgery. At this point, you’ve already met your deductible by paying the earlier $500 and other medical expenses. With co-insurance, your insurance covers 80% of the surgery cost, and you’re responsible for 20%. So, you’ll pay $2,000, and your insurance covers the remaining $8,000.
- The $2,000 you paid for the surgery brings your total spending for the year to $5,000 (including co-pays, co-insurance, and deductible payments). Because you’ve reached your out-of-pocket maximum of $5,000, your insurance will now pay 100% of covered in-network costs for the rest of the year.
Types of Health Plans
Health insurance plans vary in terms of how much freedom of choice a plan gives you in selecting doctors and the amount of money you will pay out-of-pocket. Common types of health insurance plans include:
Health Maintenance Organization (HMO):
With an HMO, you pick a main “primary” doctor from a list called a Primary Care Provider (PCP). Your PCP refers you to specialists for your eosinophilic condition. HMOs usually cost less but limit your specialist choices.
Preferred Provider Organization (PPO):
PPOs give you more choice in doctors. You pay less if you use doctors in their network but more if you go out of it. PPOs tend to have higher premiums and out-of-pocket costs and HMOs.
Point of Service (POS):
A POS is like a mix of HMO and PPO. Read the plan language carefully to understand whether or not the plan you are purchasing requires a doctor’s referral to see a specialist and any additional costs related to doctors who are “out-of-network”.
High-Deductible Health Plan (HDHP):
A “deductible” refers to the amount of money you will pay before your insurance company pays for a healthcare service. With HDHPs, you pay a high deductible before your insurance begins paying. After that, insurance will cover most of your costs.
Types of Healthcare Accounts
In addition to health insurance, you may have the option to maintain a healthcare account through your employer. These accounts work alongside your health insurance plan and provide tax advantages to help you to save money on eligible health expenses. These accounts include:
Flexible Spending Account (FSA):
An FSA is like a savings account for healthcare expenses. You can save pre-tax money to pay for qualified medical expenses like copays and deductibles. Unused funds in the account cannot roll over to a future year.
Health Savings Account (HSA):
An HSA works with high-deductible plans. You can save pre-tax money for qualified medical expenses, and what you don’t use rolls over from year to year.
Before picking a plan and a healthcare account, think about your own needs. Consider your health, where you live, and how much you can pay on your own. It’s essential to find a plan that fits your personal needs and your eosinophilic care.
