If you think health insurance is confusing, you are not alone. We receive many emails and phone calls from customers who have questions about how they should select a healthcare plan, what certain health insurance terms mean and why prices differ between plans.
Here is a list of the top questions we get about buying a health insurance plan:
- I need health insurance. Where do I start?
- Why is the pricing so different between healthcare plans?
- What is a deductible?
- What is coinsurance?
- What is a copay?
- What does “in-network” and “out of network” mean?
- What are the differences between a PPO and an HMO?
- What is a health savings account (HSA)?
- How do I know what health insurance plan is the best for me?
- Will my coverage renew every year like my auto insurance does?
I need health insurance. Where do I start?
Your first step is to run a health insurance quote and find out what options are available. To run a quote online, you will typically need to provide your age, gender, ZIP code and tobacco status. If you want to see if you qualify for a tax subsidy, you will be asked additional information about the total number of people in your household, and your total income for the year in order to determine an estimate for your subsidy.
Why is the pricing so different between healthcare plans?
Health insurance pricing is determined by many factors: your age, where you live, your tobacco status and family size. There are also different plan levels: Bronze, Silver, Gold and Platinum that vary in price. For example, if you live in Florida and your friend who is the same age lives in Minnesota, and you have the same plan level, your friend is most likely going to have cheaper health insurance because the state of Minnesota has some of the lowest rates in the country. Another example: A 40 year old male in Texas can pay $213 a month for a healthcare plan with a $6,000 deductible, or he can pay $481 a month for a healthcare plan with a $500 deductible from the same company. The first plan is a low cost, Bronze plan, and the second is a Gold plan, which has richer benefits, like a low deductible.
What is a deductible?
A health insurance plan deductible is a set dollar amount your health insurance company requires you pay out of your own pocket each year before your health insurance plan kicks in to pay for your medical claims. Example: You purchase an affordable health insurance plan with a low monthly premium, but your deductible is $6,000. In addition to your monthly insurance costs, you must pay the first $6,000 of medical services you incur out of your own pocket.
What is coinsurance?
After you pay your deductible, you could still owe money out of pocket to pay for your coinsurance amount. Coinsurance is the amount you are required to pay for a medical claim, aside from any copays or your deductible. Example: Your health insurance plan has a 20% coinsurance requirement. If you have a $1,000 medical bill, you will owe $200 to your health insurance company, and the insurance company would pay the remaining $800.
What is a copay?
A copay or “copayment” is a flat fee for medical services or devices that your health insurance plan may require you to pay. Example: You visit the doctor and are asked to pay a $30 copay for the visit. That is the set amount you owe for the doctor visit, and your health insurance company will pick up the rest of the bill.
What does “in-network” and “out of network” mean?
When comparing health insurance plans, it’s very important to review how broad or how narrow the insurance company’s network is, especially if you have a doctor you prefer to see. Many times smaller, narrow networks offer affordable health insurance plans. But don’t be swayed by price unless you are willing to see a different doctor than you are used to. If you have a health condition or see several physicians many times throughout the year, make sure the network is broad and covers all of the facilities and doctors you might visit. Paying out of network pricing for medical services can ramp up your healthcare expenses quickly.
What are the differences between a PPO and an HMO?
A PPO plan (which stands for Preferred Provider Organization), is a health insurance company’s preferred network of doctors, clinics and hospitals. These healthcare providers are contracted to provide services to the health insurance plan’s members at a discounted rate. This gives patients the opportunity to see doctors and specialists “in-network” as needed.
If you have a PPO healthcare plan, services provided by an out of network physician are typically covered at a lower percentage than services rendered by a network physician.
An HMO plan (Health Maintenance Organizations) typically offers lower out of pocket healthcare expenses but has a narrower network doctors and hospitals to choose from compared to other health insurance plans. When you select an HMO plan, you are usually required to select a primary care physician. That physician will be asked to make the most of your healthcare needs. And if you need to see a specialist, you’ll need to obtain a referral from your primary doctor.
What is a health savings account (HSA)?
A health savings account is available to individuals enrolled in qualified high deductible health plan. The funds contributed to the account are not subject to federal income tax at the time of deposit. Funds must be used to pay for medical expenses, prescriptions and some over the counter aids. Unlike other flexible savings accounts, the funds do not need to be spent in one calendar year and can roll-over year after year.
How do I know what health insurance plan is the best for me?
Your health insurance purchase is a very personal decision. It reflects your lifestyle and depends on your budget. But you can feel confident in your healthcare purchase if you take the time to shop for health insurance and compare your options. By understanding not only the monthly price, but what you will have to pay out of your own wallet should you incur a medical expense, can help make your decision easier. Remember to take your time and ask friends or relatives in your area what their experiences have been with particular health insurance companies. While you can’t predict the unexpected medical emergency, you can at least get the financial protection you need in place.
Will my coverage renew every year like my auto insurance does?
Yes, but that doesn’t mean you should let that happen. HealthCare.com has found, on average, a majority of individuals and families can save up to $700 per year on their healthcare plan if they shop around for different coverage each year. And that’s for nearly the exact some healthcare plan you had previously, but either with a different carrier or different plan level. Health insurance companies will change their pricing annually, so you should always expect a cost increase. But don’t let a $20 per month increase deter you from taking the time to re-shop. You could put that extra $20 back in your pocket ($240 for the year), plus some.
It doesn’t hurt to run a health insurance quote to see what healthcare plans are available. In fact, it’s free and completely anonymous.