Health insurance jargon is one of the most confusing parts of choosing a health insurance policy for yourself or your loved ones. There are so many different terms, and it’s difficult to understand how they’ll impact the way your health insurance works when you need it most.
Many Americans encounter health insurance terminology for the first time when they look for a health insurance policy on healthcare.gov. Healthcare.gov is the official health insurance marketplace for the Affordable Care Act. Most people know they need to check in once a year. After that, it can get puzzling.
No matter what has you looking at health insurance policies right now, things get easier once you have a grasp on the lingo. There are hundreds of different terms, but only a handful you’ll need to know to get a good start. Plus, you can always look up anything that doesn’t make sense.
Let’s get acquainted with some of the most important health insurance terms:
Your health insurance premium is the amount you pay every month to keep an insurance policy current. If you have an Affordable Care Act plan, then you’re usually protected from being dropped from the plan right away if you’re late on a payment. However, being very late can still endanger your insurance.
Insurance from other sources might have different rules. For instance, your insurance may be suspended if you are late on a payment until you are caught up. Whatever the case, a premium is spelled out when you enroll in your plan. The premium will almost never change from month to month.
The deductible is an amount you must pay out of pocket before your insurance pays for certain covered services. These services usually include things like inpatient surgery and emergency room care. There is often no deductible for a prescription drug plan – instead, you access your full benefits right away.
In general, lower premiums mean higher deductibles and vice versa. It is not unusual to have to pay $5,000, $8,000, $10,000, or even more out of pocket when you need a complex surgery or a long course of treatment, such as treatment for cancer.
Once the deductible is met, then all covered services will be paid for to the full extent of your policy’s coverage (but not necessarily 100%), usually until the end of that calendar year (December 31.) On January 1, the deductible is reset. Sometimes, the reset date is on the anniversary of policy adoption.
A copay or copayment is an amount you pay out of pocket when accessing a covered service. The most common copays are associated with a prescription drug plan. Your prescription drug insurance policy might lower the cost of your medications by 70%, but you would still need to pay for the rest.
You pay a specific copay every time you access a service – it doesn’t matter whether or not you have met a specific deductible. This is the key difference between the copay and a very similar concept, a coinsurance payment.
Coinsurance is the percentage of the cost of a covered service you must pay even after you have met your deductible for the year. While it is intended to be lower than the amount you pay for a deductible, it can range up to a substantial percentage of the total cost.
Affordable Care Act (ACA)
Affordable Care Act plans are designed as an alternative to employee-sponsored health insurance and can be accessed once a year during open enrollment. Healthcare.gov is the official, nationwide website for the ACA marketplace, but some states also operate their own website. Outside of annual open enrollment, you may still be able to adjust your insurance policy after a “Qualifying Life Event.”
About 35 million Americans currently use a plan affiliated with the Affordable Care Act.
Affordable Care Act plans all meet a certain basic standard of coverage. Beyond this, they are divided into four tiers known as Bronze, Silver, Gold, and Platinum. Typically, higher tiers have larger monthly premiums, but also offer lower deductibles, and may have lower copays and coinsurance.
Employer-Sponsored Health Insurance Plan
This refers to any health insurance plan provided to the enrollee by their employer. The majority of employed Americans have employer-sponsored health insurance. Most organizations that have 50 employees or more are required to offer insurance. The quality of that insurance varies widely.
Are you still feeling a little bit overwhelmed? You can get personalized help from your own local health insurance broker. The team at CHIB is here for you. Contact us today to find out more.