Health Insurance Options Explained in Easy Terms

Fran Majidi
March 5, 2019

You may have heard that in 2019 there is no federal fine for not having health insurance. You may even be thinking that you should save some money by not buying it for yourself, if you have a job that doesn’t offer coverage. Sometimes, it’s good to look at certain scenarios and your own financial profile to see if not having any health insurance at all is really a gamble or not. After all, spending a few hundred dollars a month (or more) is not a joking matter but neither is spending thousands if something terrible happens. Buying health insurance requires some fact-finding and reflection. We’re here to help. If after you’ve read this article you decide you’d like to buy health insurance and have a Qualifying Event, you can still buy affordable health insurance.

I See the Doctor Only a Few Times a Year. Do I Need Health Insurance?

Health insurance covers you when you have a medical emergency by protecting your assets from high medical bills. To put things in perspective, healthcare costs are the #1 reason people file bankruptcy.

Generally speaking, everyone needs health insurance, unless they are 65 and older and have medicare or if they qualify for Medicaid because of low or no income. Uninsured people risk medical bankruptcy when they have zero coverage and have a sudden need for regular medical attention or are hospitalized. .

Group Health Insurance

Most people who buy insurance through an employer elect a group health insurance plan because the rates are the lowest. This is because there are so many people to cover that the insurance company offers a reduced group rate. Monthly costs are usually lower for group health plans.

If your company offers a wellness program for employees, the company’s costs and yours may be significantly reduced too.

Who Is Eligible for Medicaid?

Medicaid is a state-run health insurance program for low-income individuals and families. Rules vary from state to state but eligibility requirements are strict. Some families are not eligible for Medicaid but qualify for State Children’s Health Insurance (SCHIP), which covers uninsured children less than 19 years old, whose family earns up to $36,200 a year for a family of four.

What’s the Maximum Out-of-pocket Cost for Healthcare?

According to the Affordable Care Act, your costs can’t exceed $6,600 for individuals and $13,200 for families regardless of which insurance plan you have. After you reach these limits, insurance pays for 100% of your medical expenses.

What’s Included in a Marketplace Healthcare plan?

Shots and screening tests from a doctor in the plan’s network are included in these healthcare plans. Mental health and substance abuse services are provided too.

Terms You Need to Know to Better Understand Before Choosing a Healthcare Plan

  • Deductible: What you pay before your health insurance begins to pay for services.
  • Copayment (or copay): What you pay when you visit the doctor or have a medical service performed.
  • Coinsurance: Much like copay, it is your share of the cost of service, usually expressed as a percentage. This applies in cases of surgery or a hospital stay.
  • Premium: The amount you pay for coverage each month.
  • Network: The doctors and facilities contracted with your healthcare plan.

What Is Fee-for-service (FSS) Health Insurance?

Also called indemnity health insurance, FSS is traditional insurance, where you pay for your doctor out-of-pocket and get reimbursed by the insurance company afterwards. Before you are reimbursed, you must pay the deductible. FSS provides basic coverage like doctor visits, hospitalization, surgery and more. Major Medical kicks in after FSS runs out of coverage if you elect to have both types of coverage. FSS plans tend to focus on treating illnesses, not preventative measures and screenings. They also limit the number of days you are covered for a hospital stay. People tend to like FSS plans because they do not limit your choices in care providers, but others dislike that it can be expensive and does not focus on preventative care.

What Are Managed Care Health Plans?

These types of coverage focus more on preventative healthcare and have networks of doctors, hospitals, clinics and other related healthcare. Managed care plans are usually more affordable than FSS plans. You’ll probably recognize managed care plans as either HMO or PPO plans. HMOs are usually cheaper and have no deductibles, but there is a copay for office visits (usually less than $30). With an HMO, you need to find a PCP within network and you must get a referral from that PCP when you need to see a specialist. To be covered, the specialist should also be an in-network provider. There’s also an EPO plan, which is similar to an HMO, except you’re allowed to choose your own specialist within the network without a referral from the PCP. Point of Service (POS) plans combine HMO and FSS options. You have a PCP and no deductible. There is a small copay for doctor visits. The main difference is that you can see a physician outside of the network but you’ll have to pay a deductible to do so (usually $300 or more) and co-insurance (30 or 40%). A Preferred Provider Organization (PPO) doesn’t require that you work with a PCP for referrals. You’re also free to go outside of the PPO’s group of doctors and hospitals. However, if you use a physician from the network you can get up to 100% of the care reimbursed while you’re only eligible for 80% for non-network treatment. With a PPO, there is a maximum on out-of-pocket expenses (not counting copays and monthly premiums). After you meet that max, the insurer pays 100% of benefits.

How Do I Choose a Doctor from My Healthcare Plan?

The most cost-efficient way to choose a doctor is to choose a Network Provider within your Network of Providers. All that means is that it’s cheaper to see doctors who are contracted with your healthcare insurance than a doctor outside of that network.

Which Hospitals Am I Covered for if I Have an Emergency?

If you have an emergency, you should not worry about anything other than getting to the closest hospital in the area. Legally, an insurance company cannot charge you more for going to an out-of-network hospital in an emergency situation.

How Do I Choose a Deductible with My Health Insurance Plan?

If you pay a higher monthly premium you’ll likely have a lower deductible and/or coinsurance. So, you may pay more monthly, but if you’re hospitalized or need surgery, you pay less before insurance kicks in. However, if you pay less each month, if you need surgery or a costly medical procedure, you’ll likely pay more. There is no perfect way to choose how to spread this out. You have to predict what your medical needs will be or protect yourself in case something unusual goes wrong with your health. The amount that the insurance companies pays overall varies from policy to policy. A Lifetime Maximum is the maximum amount the insurance company will pay for the life of the policy.

Are Prescription Medications Covered by My Health Insurance?

When you choose a health plan, you’ll get a breakdown of what percentage of the cost of medication your insurer will pay for. You’ll find the specifics of coverage under your summary of benefits and coverage. Insurers usually have a specific amount they pay for certain medications and you’re left to pay the remainder.

Does My Health Plan Choose My Pharmacy?

Some health plans have a network of pharmacies they work with. Contact your insurance company or look at their website to see if yours is an in-network pharmacy. If it’s not, you may be paying more than you should for your healthcare.

To see what your health insurance options are, visit here to fill out a form and be connected with a healthcare insurance professional who will help you get covered.

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