Have you ever been confused by the way insurance people talk?
If you have, that’s understandable. The way we talk is confusing sometimes. But if you can understand the most common insurance words and terms it will put you ahead of the average insurance shopper.
What is the Marketplace?
Have you ever heard of Helathcare.gov? It’s where you can buy health insurance for you and or your family. That’s why this kind of insurance is often called individual and family health insurance. Since you can buy health insurance from Healthcare.gov, it’s often called the Marketplace or sometimes the Exchange (although, you will hear Exchange less frequently).
What does Carrier mean?
This is short for insurance carrier and refers to any company that sells insurance. Blue Cross Blue Shield, United Health Care, Oscar, and Cigna are some common examples of carriers. These carriers can sell their insurance through healthcare.gov, in other words, the marketplace. In Tennessee there are six carriers that sell health insurance on the marketplace.
What is the difference between a Plan and a Policy?
When you buy health insurance, you can choose from different types of plans. Some have higher deductibles and lower premiums, and some even have better copays (We’ll explain those later). These are different types of Health Insurance plans. When you’ve bought health insurance, the plan you bought is called your policy. Other people may have the same plan as you but will have a different policy. You and your neighbor may have the same type of car insurance, but your cars are on different policies. It is the same for Health Insurance.
What does Cover or Covered mean in Health Insurance?
When you buy any health insurance plan, there are accidents and services that the plan will help you pay for. All those expenses would be what you call covered. If something is not covered that means your insurance will not pay for it. For example, your insurance will not pay for you to have plastic surgery. But they will pay to have surgery on your broken arm, so we would say that all the medical needs to fix your arm are covered services.
Major Medical Plan on the Marketplace
Ever heard of Obamacare? In 2010 the Affordable Care Act (ACA) was passed by the government. This regulated the kind of plans that carriers could sell on the Marketplace. All health insurance plans sold on the Marketplace are what you call Major Medical Plans. This means that all the plans meet the minimum benefit requirements of the ACA. These minimum benefit requirements are to make sure that no low-quality plans are being sold among high-quality plans, thus confusing shoppers. In other words, on the Marketplace there are no wolves in sheep’s clothing. All plans sold on the marketplace cannot ask you about your medical history and they also cannot turn you down if you have a pre-existing condition such as diabetes, asthma or cancer. Another feature about these plans is that there is no limit to the amount they will pay. If the medical attention you need costs five million dollars, Major Medical Plans from the Marketplace will pay for it. These plans also give you free preventive care, which include, a yearly doctor visits, shots/vaccines, tests, and exams to spot diseases or illnesses so they can be treated early. Keep in mind that there are Major Medical Plans that are sold off the Marketplace, and while they can be similar, they do not have the same features that we discussed here. This is why it is important to specify if they are being sold on the Marketplace or not.
What is a Premium?
Your Premium is the amount you must pay per month for your health insurance. It works the same way as a subscription. If you don’t pay your premium, then you don’t get to keep your insurance.
What is a Deductible?
Your Deductible is the amount you must pay for medical expenses before your health insurance plan starts to help you. The lower your Deductible is, the sooner your policy will pay for your medical expenses. But it usually means you will have a higher premium. So, there is a give and take in this situation and there are different plans that give you these different options.
What are Co-pays?
A co-pay is when you only have to pay a certain amount for a service, and the policy takes care of the rest. You will often see a co-pay on a doctor’s visit. If the co-pay is $50, then that’s all you will pay to see the doctor. Normally you would have to pay your deductible before your policy will help you pay for any expenses, but if it’s a co-pay, that rule is ignored.
What is Coinsurance?
Coinsurance is when you and your policy both pay for a medical expense. It will be listed on your policy as a percentage and that is the percentage you will pay. If the policy says 20% Coinsurance, then you will pay 20% and the policy will pay 80%. At that rate, for every $100 you spend, the policy pays $400. This cost sharing phase only kicks in once you have finished paying your deductible.
What is an Out-of-Pocket Maximum?
Your Out-of-Pocket Maximum is the amount you won’t spend more than. It’s the limit for how much you will spend. Once everything you have spent toward your medical expenses is the same as your Out-of-Pocket Maximum, you won’t spend any more money. If your Out-of-Pocket Maximum is $8,000 then you know that between your copays, deductibles, and coinsurance, you won’t spend any more than $8,000. Premiums do not count toward the Out-of-Pocket Maximum.
Now that you are familiar with the terms, it’s helpful to organize paying medical expenses into 3 basic stages:
Stage 1 is where you must pay for your medical bills, this refers to your deductible.
Stage 2 is when your insurance helps you pay for the medical bills, this refers to Co-insurance.
Stage 3 is when the insurance pays for all the remaining medical expenses. You will not pay anymore since you will have reached your Out-of-Pocket Maximum.
Co-pays do not fall into any stage because they operate independent of the others except for the Out-of-Pocket Maximum. You will not have co-pays once you reach this point.
Need help with an individual or family health insurance plan? Call us today! 615-528-1227