Understanding Your
New Health Insurance
After the hoopla about the implementation of the Affordable
Care Act last winter, many people never want to think about health insurance
again. But others who have health insurance for the first time are just
learning to use their new policies and services. In case you are in the latter
category, you may still be confused by the health insurance landscape, which
can be very complex.
Health insurance is
essentially a contract between you and an insurance company designed to protect
you from health care expenses exceeding what you might be able to pay out of
your pocket. In the contract, the health insurance company specifies the
percentages or amounts of charges they will pay and how much will be your
responsibility for different health care services.
These are some of
the terms and definitions associated with health insurance:
- The amount the insurance
company charges you for a policy is called the premium. The premium
is determined by the level of coverage you have—generally, the more
medical expenses that are covered by the insurance company, the higher the
premium. (The Affordable Care Act requires that all policies now cover at
least 60 percent of expenses.)
- The deductible is
the amount that you must
pay for expenses other than preventive services each policy year before
any insurance coverage kicks in. The Affordable Care Act designates which
basic preventive services are covered by your premium with no deductible.
Preventive services may include annual physicals, immunizations and
screenings that can keep you from getting sick.
- For every medical service
not a part of your preventive care, you will be charged a co-pay (co-payment). A co-pay is a
fixed fee (such as $15) that you are asked to pay, usually at the time of
service. The co-pay is subtracted from the amount filed with your
insurance company. The amount may vary from doctor to doctor.
- Coinsurance is the
percent of the cost of covered health care services paid by consumers. The
level of coverage you have determines your coinsurance. For example, your
coinsurance at different levels might be 10, 20, 30 or 40 percent.
Obviously, a policy with 10 percent coinsurance would have a higher
premium than a policy with 40 percent coinsurance.
- The Affordable Care Act
places a cap, or limit, on your
out-of-pocket expenses, currently at $6,350 for one person and $12,700 for
a family. If you reach that amount, then deductibles and coinsurance will
no longer be charged, although you will continue to pay co-payments.
- A claim is a request for payment that a consumer or healthcare
provider submits to the health insurance company for items or services
rendered. For example, once you
have completed a doctor’s appointment, the doctor’s office will submit the
information to your health insurance company to process (if the doctor is
an out of network provider you may be responsible for submitting the
paperwork to the insurance company yourself). The health insurance company will make a
determination and send payment to your healthcare provider if
applicable. The insurance company
will also send a claim statement to you for your records explaining what
services were covered.
- An allowed amount is the maximum amount allowed to be paid for
covered health services by a health insurance company. This may also be called “eligible expense,”
“payment allowance,” or “negotiated rate.”
In most cases your doctor will accept the allowed (maximum) amount
paid by the health insurance company as ‘paid in full’ and you will not be
responsible for the difference.
- Balance billing is when the provider bills the consumer for
the difference between the provider’s charge and the amount allowed by the
health plan. For example, if your
doctor does not accept the maximum allowed then you may receive a bill from
them charging you the difference between the doctor’s charge and the
maximum allowed by your health insurance company. You will then be responsible for making
this payment.
You will find a more complete glossary of health insurance
terms at Https://www.healthcare.gov/glossary/
. The better you understand your health insurance, the more you can benefit.
Barbara Metzger and Dena Wise
Great information and easy to assimilate.
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