Understanding health insurance terms is crucial to picking the best plan for you and your loved ones. Looking to learn more about your insurance by learning the particulars of around specific terms? We’re making health care easier by explaining eight main terms you should know before your next visit at NWPC!
Health insurance premiums are monthly (or sometimes quarterly) amounts you pay to your health insurance provider to retain coverage. When selecting a health insurance plan, you will notice a range of premium costs. It is in your best interest to consider all the costs related to your health plan before deciding which one is best for you. For example, low monthly premiums might have higher deductibles or copays, which could increase your out-of-pocket expenses if you frequent your medical provider.
Your deductible is the amount you pay before your health insurance kicks in and begins covering your medical costs. Deductibles vary in prices and coverage from one provider to the next, so it is essential to investigate how your insurer applies your deductible ahead of any visit.
One health insurance plan might apply your deductible to all medical services, while another might have separate deductibles for different services, like prescription drugs. It is also necessary to keep in mind that deductibles directly affect your premium costs – lower premiums can mean higher deductibles, and higher premiums usually have lower deductibles. Are you having difficulty determining the best deductible amount for your budget? It is advisable to keep your deductible at or below 5% or your yearly income.
Copayments, or copays, are set fees that you pay when you get your healthcare service during a visit. These flat-rate fees vary from plan to plan and from service to service. For example, you might have one copayment amount due for routine visits to your primary care physician, a higher copay for specialists, and yet another amount for prescription drugs. If you’re having difficulty finding out how much your copayment might be, you can review your insurance card or call your provider.
Coinsurance refers to the share of your costs for a health care service. After you meet your plan’s deductible, you begin paying coinsurance, which is typically a percentage of the overall medical service cost. For example, your coinsurance share might be 20% of a hospital visit, and your insurer’s part would cover the remaining 80%. Health insurance plans with higher monthly premiums often have lower coinsurance percentages.
5. Maximum Out of Pocket Costs
Maximum out-of-pocket costs are exactly what the name implies: the maximum amount you pay out of pocket, per year, for medical services. This amount includes your copay, the coinsurance amount, and the deductible itself. However, it does not include premiums or specialty services like massage.
Once you meet your maximum out-of-pocket amount, your health insurance company potentially takes over and covers any remaining balance. For example, let’s use the 2020 maximum amounts: $8,150.00 for individuals and $16,300.00 for families. As an individual, you had no medical expenses for the first part of the year, but then you find yourself needing emergency hospital care. If your health insurance plan requires you to pay 20% of the hospital costs, but that amount exceeds the maximum-out-of-pocket expenses of $8,150.00, you are only responsible for the $8,150.00. Your insurance company covers the rest.
6. PPO vs. HMO
The two most common plan types you will encounter on your health insurance search are PPO and HMO plans. Both PPO and HMO policies work with a specific provider network. HMOs often require you to select a primary care provider (PCP) who can refer you to a specialist when needed, while PPOs allow you to work with in-network and out-of-network providers. What are the differences? Which is best for you and your family? Check out some fundamental differences below:
- Allows for more flexibility when selecting a physician and care facility
- Might have fewer restrictions when seeking out-of-network medical care
- It may potentially cover a portion of an out-of-network physician visit, but it might cost more than in-network visit and care
- Often has lower monthly premiums
- Typically requires a referral from your PCP before you can see a medical specialist
- Might not cover any health expenses if you choose to see a doctor outside of the HMO network.
7. Health Savings Account (HSA)
A health savings account (HSA) is a savings account geared towards future medical expenses. Each year you can decide how much money you would like to put towards your HSA, which you can use for deductibles, copays, and coinsurance. The money you contribute is tax-free, and the balance rolls over from year to year. Because HSA funds are non-taxable when applied to the proper medical expenses, you can potentially reduce your tax burden amount. Remember, the accumulated funds must be used to pay for qualified medical expenses, and premiums are typically not included as allowable costs.
8. High Deductible Health Plan
High deductible health plans (HDHP) have lower monthly premiums, but higher deductibles than conventional health insurance plans. HDHP plans are often combined with HSAs to help offset some of the medical costs.
Choose NWPC for Your Primary Care
At Northwest Primary Care, we partner with a series of health insurance companies and various Medicare plans to make visits more affordable. We are here to help you take charge of your health by offering a variety of medical services. Call and schedule an appointment with one of our practitioners today.