Whether you rely on your employer for health insurance or you’re undertaking the daunting task of finding your own coverage through private insurance or the health insurance marketplace, understanding the ins and outs of health insurance is no easy feat. 

And while there is a lot of uncertainty that surrounds health insurance in the United States, two things are for sure: health insurance is expensive and confusing.

As we’re unfortunately unable to do anything about the former in this post, we’ll do our best to address the latter by explaining the basics of health insurance coverage and defining commonly-used insurance terms.

Our ultimate goal is to give you the knowledge necessary to navigate the health insurance landscape with confidence.

Common Health Insurance Terms and Definitions

Health Insurance Network

A health insurance network is a group of healthcare providers, suppliers and facilities that have contracted with a health insurance provider to provide discounted care to patients covered by the insurer’s plans. 

This relationship between insurers and providers may dictate what healthcare providers you can see under your plan and how much care from providers outside your network costs. 

To put it simply, most plans have doctors and facilities that are considered “in-network” and are covered by the plan, while all other doctors and facilities are “out-of-network” and not covered to the same extent.

Health Insurance Premium

Your health insurance premium is how much you have to pay every month to maintain coverage under your plan (whether you use your insurance or not that month). 

Health Insurance Deductible

This is the amount you pay for healthcare before your insurance kicks in. Some plans will pay for doctor’s visits and generic prescriptions before you reach your deductible, however, most do not. 

Most insurance plans require you to pay out-of-pocket (i.e.: your own money) for any doctor’s visit, lab test, prescription or procedure until you reach your deductible amount. After you’ve reached your deductible, you typically are only responsible for copays and coinsurance payments.

For example: It’s January 2nd and you haven’t used your insurance yet this year. Your deductible is $2,500 and you slip on some ice and break your leg. You must now pay $2,500 toward your emergency room visit, X-rays and treatment before your insurance will cover any of these costs. 

Copay

A copay — or copayment — is the amount your insurance charges you for a medical service once you’ve reached your deductible. This includes but is not limited to doctor’s visits, specialist appointments and prescription drugs. 

Coinsurance

Coinsurance is the percentage you pay for a healthcare service covered by your plan — after you’ve paid your deductible. 

For example: You’ve already reached your deductible and your coinsurance for outpatient surgery is 20%. Your outpatient surgery costs $10,000, which means you’re responsible for $2,000 of that $10,000 medical bill.

Out-of-Pocket Maximums (or Limits)

Your out-of-pocket maximum (or limit) is the total amount you will have to pay for healthcare services in a year, not including your monthly premiums. While many people do not reach this limit, this is very important for people who need to receive a lot of care throughout the year or who suffer a costly injury or disease.

For example: Your out-of-pocket maximum is $10,000, your deductible is $2,000 and your premium is $100. It’s mid-February, which means you’ve paid $200 in premiums for the year. You haven’t had to use your insurance yet, but you’re not feeling well. You go to the doctor, which costs $200, and she tells you that you need your appendix removed. 

So far, you’ve paid $200 in premiums and $200 toward your deductible. Your surgery will cost $30,000, but your $10,000 out-of-pocket maximum will ensure you don’t pay the full amount for the surgery.

Because you paid $200 to see the doctor, you will need to pay $9,800 toward the cost of your surgery before your out-of-pocket maximum kicks in. You also will need to continue to pay your premiums every month, however, you will not pay for any other healthcare service for the rest of the year.

Important Questions About Health Insurance Plans

In addition to knowing a health insurance plan’s network, premium, deductible, copays, co-insurance and out-of-pocket maximums, there are other important things to know about any health insurance plan. 

Is my current health care provider and/or doctor included in the plan?

First and foremost, you should ask if your current healthcare providers are on the insurance plan you’re considering. Contact your doctor to inquire if he or she takes the plan, but know that your doctor may tell you to contact the insurance company itself. If so, be sure to ask your doctor for his or her provider number, as the insurance company may require this information.

What type of plan is this health insurance plan?

There are two different types of common health insurance plans: health maintenance organization (HMO) plans and preferred provider organization (PPO) plans. 

If you have an HMO plan, you are only able to see healthcare providers who are under contract with your health insurance company and under your specific plan. If you have a PPO plan, you can see health care providers inside and outside the plan’s network; however, you’ll pay more for providers outside the PPO’s network. 

Does this plan cover my pre-existing conditions?

Unfortunately, there are still health insurance plans out there that restrict or deny coverage of pre-existing conditions. Before deciding on any insurance plan, it is vitally important to ensure coverage of any conditions you or your family members may have. 

Thankfully, all plans under the Affordable Care Act’s Health Insurance Marketplace cannot deny you coverage or charge you more for any condition you have prior to receiving coverage in the marketplace. 

What if I need my health insurance while I’m traveling? What if I get sick or injured out of network?

More often than not, emergency care is covered out of network and in other states. However, this is not a given — and it’s important to know what is covered and what is not. Any good health insurance plan will cover emergency care costs, but the amount that is covered can vary greatly from plan to plan.

Still confused?

If you have any questions about health insurance, deductibles, premiums, copays and coinsurance after reading this post, please feel free to contact us. We’re always happy to help both patients and non-patients alike with their healthcare questions and concerns.