Understanding medical insurance terms

this is a transcript of the video:

Today, I would like to go over certain health insurance terms that might be confusing and try to help you demystify the health insurance jargon.

So, lets get started:

Let's start with understanding what the premium is -  well, the insurance premium is The amount you pay monthly for your health insurance plan. The cost will vary by person and if your income is below 400% of the Federal Poverty Level (FPL) you may receive subsidies from the government to reduce your cost. You pay your portion of the premium even if you don't use medical care that month. If you don't pay your portion of the premium the policy is canceled, doctors will want their money back and you can't sign up again until next open enrollment.

·         Enrollment period / open enrollment: The window of time during which you can apply for health insurance or modify a plan to include your spouse and/or children. Policy-holders are unable to adjust their plan until the next open enrollment unless they experience a qualifying life event. These include a marriage, divorce, birth of a child, changes to individual/household income, or interstate residence relocation. For year 2018 the open enrollment is November 1, 2017 to December 15, 2017. However if you are enrolling through CoveredCA (in California) you might have until January 31, 2018 to apply for health insurance. 

Penalty - If you can afford health insurance but choose not to buy it, you must pay a fee called the individual shared responsibility payment. (The fee is sometimes called the "penalty," "fine," or "individual mandate.") Here is the penalty for year 2018

The fee is calculated 2 different ways – as a percentage of your household income, and per person. You’ll pay whichever is higher. The fee is either 2.5% of your income of $695 per adult.

Percentage of income

·         2.5% of household income

·         Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace

Per person

·         $695 per adult

·         $347.50 per child under 18

·         Maximum: $2,085

Coinsurance—the amount you pay to share the cost of covered services after your deductible has been paid. The coinsurance rate is usually a percentage. For example, if the insurance company pays 80% of the claim, you pay 20%.

Copayment—one of the ways you share in your medical costs. You pay a flat fee for certain medical expenses (e.g., $10 for every visit to the doctor), while your insurance company pays the rest. 

The coinsurance and copayment is very often confused. Keep in mind: the coinsurance is ussually a percentage and the copayment is a fixed dollar amount. 

Deductible—the amount of money you must pay each year to cover eligible medical expenses before your insurance policy starts paying. However, not all services are subject to the deductible, so carefully look at the summary of benefits in order to see what is and what is not subject to the deductible. This will save you lots of money and possibly paying for unnecesary high premium. 

Out-of-pocket maximum—the most money you will pay during a year for coverage. It includes deductibles, copayments, and coinsurance, but is in addition to your regular premiums. Beyond this amount, the insurance company will pay all expenses for the remainder of the year.

Health maintenance organization (HMO)
THE hmO provides comprehensive health care services for enrollees in a particular geographic area. HMOs require the use of specific, in-network plan providers. (For example Kaiser is an HMO, you can only use your health plan at Kaiser and you will need to select a Primary Care Doctor and always get refferals to the specialists

Preferred provider organization (PPO)—a health insurance plan that offers greater freedom of choice than HMO plans. Members of PPOs are free to receive care from both in-network or out-of-network (non-preferred) providers, but will receive the highest level of benefits when they use providers inside the network. I highly advise anyone to check the network of doctors before signing up for a PPO plan. 

Exclusive provider organization (EPO) plan - A more restrictive type of preferred provider organization plan under which consumers must use providers from the specified network of physicians and hospitals to receive coverage; there is no coverage for care received from a non-network provider except in an emergency situation.

Network—the group of doctors, hospitals, and other health care providers that insurance companies contract with to provide services at discounted rates. You will generally pay less for services received from providers in your network.

In-network provider—a health care professional, hospital, or pharmacy that is part of a health plan’s network of preferred providers. You will generally pay less for services received from in-network providers because they have negotiated a discount for their services in exchange for the insurance company sending more patients their way.

Out-of-network provider—a health care professional, hospital, or pharmacy that is not part of a health plan's network of preferred providers. You will generally pay more for services received from out-of-network providers if you have a PPO plan and you might not get any services covered out of network if you have an HMO plan.

That’s why it is very important to check your doctors, clinic or pharmacy before you sign up for a plan. (if you want to keep your doctors)

Health savings account (HSA)—a personal savings account that allows participants to pay for medical expenses with pre-tax dollars. HSAs are designed to complement a special type of health insurance called an HSA-qualified high-deductible health plan (HDHP). HDHPs typically offer lower monthly premiums than traditional health plans. With an HSA-qualified HDHP, members can take the money they save on premiums and invest it in the HSA to pay for future qualified medical expenses.