When reviewing your health insurance options for 2015, you’ll likely come across many terms that seem confusing or just don’t make sense. But to get the best plan at the best value, you have to understand what these terms mean and how they can cost you financially. Here are a few I have put together to help you through the 2015 insurance enrollment process:
Insurance Terms for 2015
- Deductible – Once your insurance carrier processes a claim, they apply it to the “deductible”, or amount your insurance company holds you responsible to pay before they will begin paying claims. Deductibles are typically $1000, $1500, $2500 or greater.
- Coinsurance – Once you have satisfied your health plan deductible, your insurance will pay according to the benefits outlined – say 80/20. This means your insurance carrier will pay 80 percent of your claim, and you will be responsible for the remaining 20 percent – otherwise known as “coinsurance.”
- Copay – A fixed dollar amount you pay for a medical service regardless of the charged amount. For example: $25 copay to your primary care physician or $150 emergency room copay.
- Premium – The amount you pay each month for your health insurance plan.
- Premium subsidy (premium tax credit) – Assistance in the form of a tax credit for those making less than 400 percent of the federal poverty level, which can be received in advance monthly to be applied towards your monthly health plan premium to reduce costs. This is calculated based upon your modified adjusted gross income and household size.
- Cost-sharing – A reduction in out-of-pocket costs (such as deductibles, coinsurance, copays, and annual maximum out-of-pocket limits) for those making up to 250 percent of the federal poverty level.
- HMO (Health maintenance organization) – a health plan that typically has limited participating providers with all medical services usually being coordinated through a “gatekeeper” or primary care physician. Referrals to specialists are usually required, and these plans usually do not offer out-of-network benefits.
- PPO (preferred provider organization) – a health plan that typically has a larger provider network and many times also offers out-of-network benefits at a reduced pay rate. Because of this flexibility, premiums are usually a bit higher.
- Modified adjusted gross income – a financial calculation used to determine your eligibility for premium assistance. Your Advisor will perform this calculation for you.
- Exchange navigator – a person who works for the government and assists those with health plan applications but IS NOT a licensed agent and cannot offer plan advice or recommendations.
- Guaranteed-issue health plan – Insurance plans that do not require you to pass a physical or go through underwriting. You are guaranteed to be accepted by the insurance company regardless of any current or past health conditions.
- Policy auto-renewal – rather than going through the process of selecting a new insurance plan and applying for coverage, you allow your current plan to stay in place without change and without taking any action – like you would car insurance. There are risks involved including paying higher premiums and receiving inaccurate premium subsidies which could be quite significant.
This should provide some guidance while you’re reviewing your insurance options. Do you have any others we can help you with? Do you have other enrollment questions you would like us to answer?
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.