Health insurance can seem incredibly complex, with strange terminology and complicated policy provisions. But having a solid grasp of how coverage works is key to using your benefits effectively and avoiding surprises. This guide examines health insurance plans in plain language, including types of coverage, costs and fees, provider networks, claims processing, appeals, and resources to help you become an informed insurance consumer.
What Exactly is Health Insurance?
At its core, health insurance provides a way to share the risk and costs of medical expenses across a large group of people:
- Individuals pay premiums to enroll in an insurance plan.
- These premiums go into a pool used to cover claims submitted by all members.
- When an insured person needs medical care, the insurer pays a portion of the services based on the plan’s terms.
- Risk of unexpected high healthcare costs is spread across the group versus borne by one individual.
Having coverage in case you experience an injury, illness, or other health crisis provides essential financial protection.
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Major Types of Health Insurance Plans
There are a few common models for obtaining health coverage:
Employer-Sponsored and Group Plans
- Many companies subsidize premium costs for employees. Often most affordable options.
Individual and Family Plans
- Purchase private insurance directly through insurer or public marketplace exchange.
- Medicaid and Medicare provide coverage for low income and seniors. VA for veterans.
Catastrophic and High Deductible Plans
- Minimal coverage for major emergencies to protect from worst case scenarios.
- Add-on policies that pay lump sums for hospital stays, accidents, or critical illness.
Review all options thoroughly to determine the optimal health plans based on your situation and needs.
Key Parts of Health Insurance Policies and Plans
Insurance terminology and definitions:
Premium – The monthly or annual amount you pay to be enrolled in a health plan.
Deductible – Out-of-pocket amount you must pay each year before the insurer begins covering services.
Copay – Flat dollar amount you pay when receiving a specific medical service, often doctor visits. The insurer covers the rest.
Coinsurance – Percent of costs you pay for covered services after hitting the deductible. For example, insurer may cover 70%. You pay 30% coinsurance.
Out-of-Pocket Maximum – Total maximum you would have to pay in a year through deductibles, copays and coinsurance after which the insurer covers 100%.
Covered Services – Medical services and treatments your insurance plan provides benefits for when rendered by in-network providers.
Understanding what you are responsible for paying allows you to budget wisely and take advantage of the coverage you have.
Key Parts of Health Insurance Policies and Plans
Terminology to know:
Formulary – List of prescription medications an insurer covers. Drugs not on the formulary typically will not be covered.
Network – Facilities, doctors, pharmacies and providers that have contracted with an insurer to provide care to members of a plan.
In-Network – Healthcare providers that are part of your plan’s contracted network. Using them saves costs.
Out-of-Network – Doctors, hospitals and providers not in your network. Much higher costs to use them.
Balance Billing – When an out-of-network provider bills you for the difference between their full charges and what your insurer reimbursed them. An unpleasant surprise!
Learning some key insurance terms goes a long way to being an informed consumer.
Understanding Your Covered Health Plan Benefits
Parts of insurance policies:
- Checkups, cancer screenings, immunizations, annual physicals. Fully covered with no out-of-pocket costs thanks to the Affordable Care Act (ACA).
- Services provided at a medical practice or clinic. Primary doctor visits, specialist consults, therapy.
Urgent and Emergency Care
- Emergency room and ambulance services for critical injury or illness.
- Inpatient services at an in-network hospital like surgeries, treatments, overnight stays.
- Medications prescribed by your doctor and purchased at an in-network pharmacy or through insurer’s mail order.
Know what medical services your plan actually provides reimbursement for when they are delivered in-network.
The Health Insurance Claims Process
How insurers handle and pay claims:
- Doctor or hospital submits your claim for their services to the insurer.
- Insurer processes the claim and coverage based on your policy terms.
- Any amount not covered gets billed to you in an Explanation of Benefits (EOB).
- For in-network providers, you only pay your cost-share – deductible, copay, coinsurance.
- They cannot bill you for the balance beyond your cost-share amount.
Understanding this flow helps you budget for healthcare costs your insurance will not cover.
Paying for Medical Care Based on Your Health Plan
What you pay at time of service:
- Pay any copay at time of visit. Coinsurance bills come later.
- Provider bills insurer their rate which was pre-negotiated.
Out of Network
- Often must pay up front and get reimbursed partial amount later.
- Provider can bill higher rates leaving you responsible for balance.
After Deductible Met
- Once deductible max is reached, you pay any copays or coinsurance rates for rest of year. Much lower costs.
Knowing costs at point of care eliminates surprises and helps take advantage of negotiated contracted rates.
The Health Insurance Appeals Process
How to resolve claim disputes with your insurer:
- File an appeal providing proof and requesting insurer review.
- Insurer conducts additional claim review upon appeal request.
- If insurer still denies, an independent 3rd party reviews the claim and decides to uphold or overturn.
- State department of insurance monitors complaints data and pursues bad actors.
Learning to be your own advocate opens more possibilities for getting insurers to cover contested claims.
Helpful Resources for Navigating Health Insurance
Where to turn for assistance:
Insurer Customer Service
- Call member services number on insurance card to ask questions.
Insurance Agent or Broker
- These local experts can explain plans and coordinate care.
Employer’s Human Resources Department
- For workplace plan assistance and open enrollment guidance.
State Department of Insurance (DOI)
- Helps resolve complaints against insurance companies.
State Health Insurance Assistance Program (SHIP)
- Counselors assist Medicare beneficiaries with plan questions.
Don’t go it alone – lean on available resources to make getting the most from your health coverage easier.
The complexity of health insurance can feel overwhelming. But taking the time to understand the basics of plan structures, costs, terminology and your specific benefits gives you the knowledge needed tosuccessfully navigate the world of healthcare like an informed consumer. With patience and persistence, you will get there!