Confused about Health Insurance?

Insurance terms are confusing. Don’t be frustrated, because I can help. First of all, health insurers are required to provide you with an easy-to-understand summary about your benefits. This will make it simple to see what kind of coverage you have (including addiction and mental health services).  

Next, it’s important you understand the terms that affect how much money you must pay every month, and how much you pay when you use the insurance. Thanks to Healthline this is easy too!

Deductibles

A health insurance deductible is a specified amount or capped limit you must pay first before your insurance will begin paying your medical costs. For example, if you have a $1000 deductible, you must first pay $1000 out of your pocket before your insurance will cover any of the expenses from a medical visit. It may take you several months or just one visit to reach that deductible amount.

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You will pay your deductible payment directly to your medical provider. Note: your deductible automatically resets to $0 at the beginning of your policy period.

Premiums

A health insurance premium is the amount you pay each month to your insurance provider. This is the only payment you will have if you never use your health insurance. You will continue to pay premiums until you no longer have the insurance plan. A deductible only has to be paid if and when you use the insurance. Note: If you receive insurance through an employer, your premium is typically deducted directly from your paycheck.

Deductible vs. Copay
Your health insurance will begin paying for your healthcare expenses once you meet your deductible. You may, however, still be responsible for an expense each time you use the insurance.

A copayment is the portion of a medical insurance claim that you are responsible for paying. In most cases, a doctor’s office will request the copayment at the time of your appointment. Copayments are usually fixed, modest amounts. For example, you may be responsible for a $25 copay every time you see your general practitioner. This amount varies among insurance plans. In some cases, the copayment is not a set amount. Instead, you may owe a set percentage based on the amount your insurance will be charged for the visit.

Deductible vs. Out-of-Pocket Maximum
Your out-of-pocket maximum is the most you will pay during a policy period. Most policy periods are one year-long. Once you reach your out-of-pocket maximum, your insurance plan will pay all additional expenses at 100 percent.

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Note:  The out-of-pocket maximum is typically rather high, and it varies from plan to plan.

High- vs. Low-Deductible Plans
High-deductible, low-premium insurance plans have gained popularity in recent years. These insurance plans allow you to pay a small amount each month in premium payments. Your expenses when you use your insurance, however, are often higher than a person with a low-deductible plan. A person with a low-deductible plan, on the other hand, will likely have a higher premium but a lower deductible.

High-deductible insurance plans work well for people who anticipate very few medical expenses. You may pay less money by having low premiums and a deductible you rarely need. Low-deductible plans are good for people with chronic conditions or families who anticipate the need for several trips to the doctor each year. This keeps your up-front costs lower so you can manage your expenses more easily.

What’s the Right Deductible for Me?
A high-deductible plan is great for people who rarely visit the doctor and would like to limit their monthly expenses. If you choose a high-deductible plan, you should be good at saving money so that you are prepared to pay any medical expenses up front.

A low-deductible plan may be best for a larger family who knows they will be frequently visiting doctors’ offices. These plans are also a good option for a person with a chronic medical condition. Planned visits such as well visits, check-ups on chronic conditions, or anticipated emergency needs can quickly add up if you are on a high-deductible plan. A low-deductible plan lets you better manage your out-of-pocket expenses.

Talk with Your Insurance Provider
If you are trying to pick the right insurance for you, visit with a local health insurance provider or Healthcare.gov. Enrollment is closed but you can get covered this year if you have certain life events — like getting married, having a baby, losing other income, or moving.

If you are uninsured do something about it. As of last year, most individual and small group health insurance plans, are required to cover drug addiction treatment. This includes alcoholism and mental illness.

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4 thoughts on “Confused about Health Insurance?

  1. Don’t be too afraid of high-deductible plans. It’s not only low-users that benefit- especially if you partner one with an HSA (health savings account.). HSAs allow you to save up for out-of-pocket expenses pre-tax, and they roll over year to year. MANY families will save money on a plan with a higher deductible, not just low users. They’re worth looking into.

    Liked by 1 person

      1. I think they aren’t utilized more because they’re confusing. We do our best at open enrollment to explain, and to provide tools to show what a good deal they are…it’s a challenge every year but I can usually get through to a few folks each time. 🙂

        Liked by 1 person

  2. Helpful, easy to understand article. As an insurance professional, it’s nice to find good and accurate information for consumers. I suspect health insurance will become even more confusing in coming months.

    Liked by 1 person

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