There is no doubt that the U.S. health care system is complex. The complexity arises, in large part, because most individuals do not pay directly for medical services, but rather pay indirectly to be members of health coverage programs that pay for medical expenses. This “third-party-payer” system leads to a very common problem, which is that many people aren’t certain what health care services their health insurance will cover. This problem isn’t improved by the fact that most health coverage benefits paperwork is dry and unnecessarily opaque. Wading through the details of your health coverage is important, however, so that you get the medical care that you are entitled to.
Coverage Summary Requirements
With recent changes in health care laws, consumers have gained some important protections. Chief among the new laws is the right for customers to receive an easy-to-understand summary of their health plan’s benefits and coverage. Your insurance company must provide you with a short, plain-language summary of the health benefits that you are entitled to. The law also requires that a list of examples of how the health plan works be provided. This applies to all health plans, even those that were in existence prior to March of 2010 (https://www.healthcare.gov/health-care-law-protections/summary-of-benefits-and-coverage/).
How Health Coverage Works
Health coverage pays for medical services (i.e. health care) such as doctor visits, hospital care, medications (drugs), and any medical equipment (e.g. diabetes blood sugar monitors) that a patient may require as a result of illness. Health coverage should also provide for preventative health services, like immunization shots for children and annual physicals.
Health insurance companies generally offer several different health coverage plans. Each plan will differ as to the types of illnesses it covers, how much it plan costs per year, and how much it requires a participant to pay “out-of-pocket.” When selecting a health care plan, it is important to consider the fundamental aspects of how the plan works so that you can understand how much your health care will cost you. Here are the major components of health coverage that you should be concerned about.
Provider Coverage
For the most part, it is your health care provider who decides what insurance he or she will accept. When selecting a health care plan, it is important that you make sure your doctor or provider accepts that insurance and that particular plan. If your provider isn’t covered by your insurance plan, you will have to pay the full cost of your care out of your own pocket or find a new provider.
Copayments
A copayment is a fee you must pay, out of your own pocket, at the time of a service. Most insurance plans require patients to pay a copay to see their doctor, to see a specialist, or when picking up prescription medications.
In-Network and Out-of-Network Coverage
The prices you pay for health services will vary based on location. If you live in New York, for instance, but get medical care in California, you may have to pay for a greater portion of your care than if you had gone to a doctor in New York. In general, out-of-network costs are higher for everything except emergency medical care.
Emergency Care
Frequently, emergency medical care carries a high deductible or copayment. High out-of-pocket costs are used to prevent people from over-using the relatively expensive services of the emergency room. Understanding how much a visit to the emergency room will cost you is important to ensuring you aren’t surprised by high hospital bills.
Customizing Coverage
The great thing about health coverage in the United States is that there are a multitude of plans on the market and chances are good that there is one to fit your budget as well as your health care needs. The downside to having so much choice is that you need to know what you want from your health coverage before you go looking for a provider (i.e. insurance company). Knowing what you want and what you can afford will make it easier for you to work through your options and select a plan that meets your needs (https://marketplace.cms.gov/outreach-and-education/downloads/c2c-understand-your-health-coverage.pdf).
Glossary
Allowed Amount – The highest amount an insurance will pay for a service.
Copayment: A set price for a health care service (for example, $20 per office visit). Not all plans have a copayment. Also called a copay.
Covered costs: Any expense, related to health care, that is paid for by your health plan.
Deductible: The amount you pay for medical costs each year before your health plan begins to pay. Usually, services covered by copayments do not require you to meet your deductible before your insurance kicks in.
Coinsurance: The costs you and your health plan share. For example, you pay 20 percent of the cost and your plan pays the other 80 percent of a particular medical expense. Some plans do not have coinsurance, but most plans do.
Coinsurance Limit (or Maximum) – The most you will pay in coinsurance costs during a benefit period.
Health care: The medical service provided to a patient.
Health coverage: The insurance or other system that pays for services provide
HRA (Health Reimbursement Account) – An account that lets an employer set aside funds for healthcare costs. An HRA has tax benefits for employer and employees that are similar to those of an HSA.
Health savings account (HSA): A savings account for money that is to be used to cover medical and health expenses. Pre-tax contributions to your HSA account can help you save when you use it to pay for covered costs. Sometimes called a flexible spending account or FSA.
Maximum out-of-pocket: The largest amount of money you have to pay for covered medical costs in a year.
In-network Provider – A health care provider who is part of a health insurance plan. Charges made by this provider are fully covered under the terms of the health plan.
Out-of-network Provider – A health care provider who is not part of a plan’s network. Costs associated with out-of-network providers may be higher or not covered by your plan.
Premium: The monthly amount you pay for your health plan. Much like a membership fee. Usually a lower premium comes with a higher deductible.