Written by Zeynep Demirag | Edited by Zainab Bhatti and Nicole Xu
Can anyone explain health insurance in one sentence? Most likely not. Health insurance, just as most things health related, is nuanced and complex. This article will cover important keywords, the different types of health insurance, crucial features of payment, and essential benefits that every health insurance plan should provide. Health insurance, in its most basic form, helps protect you from paying the full cost of your health care. Five crucial terms to understand include1:
Network: Your health insurance has a group of providers that are in their network. Using physicians at hospitals in your insurance company network will keep your out of pocket cost lower; insurance companies will have lower/no benefits for out of network providers.
Premium: The amount you pay to your company each month to keep your membership active. A higher premium can lower out of pocket expenses and vice versa.
Deductible: The amount you pay every year before your health insurance pays for a portion of your services. For example, if you have a $2000 medical bill, and your plan has a $800 deductible, the first $500 will be your deductible and then your insurance company will pay their portion for the remaining $1500.
Co-pay: The fixed cost you pay before each visit. This amount does not go towards your deductible.
Co-insurance: The rate of the cost you would pay after the deductible. Going back to our example: if your co-insurance rate is10% then you would pay $150 from the $1500 remaining after deductible.
Out of pocket maximum: Maximum amount of money you pay for covered services.
Types of Health Insurance:
There are usually two types of health insurance: public and private insurance one purchases or gets it through their employer. Popular names for public insurance include CHIP, Medicare, Medicaid. Private health insurance also contains a variety of different plans2:
HMO (Health Maintenance Organizations): HMO members need to get a referral to go to a specialist from their primary care physician . HMO is the most restrictive plan to access a wide range of providers and will not cover out of network providers, however, they have the lowest premium.
PPO (Preferred Provider Organization): Unlike HMO, this plan gives you a greater range of doctors and more accessibility to out of network providers. PPO will pay for out of network providers but your premium will be higher than for HMO. PPO members do not need referrals from their primary care physician to see a specialist.
EPO (Exclusive Provider Organization): Think of this as something in between HMO and PPO, price-wise and accessibility-wise. You may see a specialist without a referral; however, depending on your plan, out of network will not be covered by the private insurance.
POS (Point of Service): Again, think of this as something in between HMO and PPO. You will need a referral for a specialist, but you may also see out of network providers depending on your plan.
*See more detailed comparison between these plans here*
Benefits that Every Plan Should Provide:
According to the US Department of Health and Human Services, you should be getting coverage and benefits for services listed below regardless of your plan3:
1- Ambulatory patient services
2-Emergency services
3-Hospitalization
4-Pregnancy, maternity, and newborn care
5-Mental Health and substance use disorder services
6-Prescription drugs
7-Rehabilitative and habilitative services and devices
8-Laboratory services
9-Preventive and wellness services
10-Pediatric services including oral and vision care (note that adult dental and visual services are not considered as essential health benefits)
Bibliography:
1. “Type of Plan and Provider Network.” HealthCare.gov, www.healthcare.gov/choose-a-plan/plan-types/.
2. “How to Understand Your Costs and Key Health Insurance Terms.” HealthCare.gov, www.healthcare.gov/blog/understand-health-insurance-definitions/.
3. “Find out What Marketplace Health Insurance Plans Cover.” www.healthcare.gov/coverage/what-marketplace-plans-cover/.