There are some basic concepts of health insurance that you should understand, if you are new to health insurance. It is essential because understanding these concepts will help you to avoid nasty financial surprises and failing to do so you will not be able to efficiently or wisely choose a health plan. The vital health insurance concepts are discussed below:
While shopping for health insurance you should be aware that your insurance company will not pay for all your covered health care expenses. Even while having health insurance you are responsible for paying a part of your health care bills, which is known as cost-sharing. Since you share the cost of your health care with your health insurance company it is known as cost-sharing.
The common cost-sharing tools are copayments, coinsurance, and deductibles that are usually applicable in some of the health plans while some of the health plans may have only one or two cost-sharing tools. If you are not aware of your cost-sharing requirement, then you will possible not know the amount you have to pay for any given health care service. If you are eligible for cost-sharing reductions while buying a health plan in your state due to your income, then you can be entitled of lower out-of-pocket costs than otherwise it would be.
Each year before the start of your health insurance coverage i.e. when it starts paying its share, you are required to pay a particular amount, which is termed as your deductible amount. However, due to the Affordable Care Act, health insurance companies are required to pay for a certain preventive health care services like yearly physical exam, screening mammogram without you meeting your deductible amount first.
A fixed amount that you pay each time after receiving a specific type of health care service is known as copayments and the copayment amount is much smaller compared to the deductible amount. A certain percentage of your healthcare bill that you pay each time after availing a particular type of healthcare service is termed as coinsurance. You need to understand the difference between a copay and a coinsurance, a copayment is a fixed amount whereas coinsurance is a set percentage of the healthcare cost. You have to pay your coinsurance after you meet your deductibles and before you have met your out-of-pocket maximum.
The out-of-pocket maximum is the limit at which you don’t have to pay money out of your own pocket to pay for expenses like deductibles, coinsurance, and copayments. Once you reach your out-of-pocket maximum, your health insurance company will start paying 100% of your covered health care expenses for the rest of the year. The money you pay towards the out-of-pocket expenses resets at the start of each year or when you switch to a new health plan just like the deductible
Non-grandfathered health plans under the Affordable Care Act cannot have out-of-pocket maximums in excess of $8,150 per person and $16,300 per family in 2020. However, health plans can have out-of-pocket limits below these amounts but not above them. The out-of-pocket caps has been applied as the Affordable Care Act and applies to healthcare services that are received from in-network providers and come under essential health benefits.
Health Plan’s Provider Network
Health plan’s provider network includes doctors, hospitals, laboratories, physical therapy centers, X-ray and imaging facilities, home health companies, hospices, medical equipment companies, outpatient surgery centers, urgent care centers, pharmacies along with several other types of health care service providers. Health care providers are called in-network if they are part of your health plan’s provider network and out-of-network if they are not part of your plan’s provider network. Healthcare plans like HMOs and EPOs plan don’t pay you anything for medical care you receive from out-of-network healthcare providers and you need to pay the entire bill yourself. Whereas plans PPOs and POs health plans pay a part of the cost of healthcare if you receive medical care from out-of-network providers. You should need to understand that in-network providers signed contract with the insurance company and agree to accept a negotiated rate for each medical service and out-of-network providers are not obligated to receive anything less than the full amount, which they charge for a given service.
Having health insurance doesn’t ensure you to receive any health care services you want at any time and at any place. Since your health plan pays a part of your medical bill, it wants to make sure that you actually need the health care and you are receiving it in an economical manner. Health insurance companies use a mechanism to ensure this and it is known as pre-authorization requirement or prior authorization. If your health plan has prior authorization requirement, then you must seek the permission of your health plan before receiving a particular health care service. If you don’t seek the permission first, then your health plan can refuse to pay and you will have to pay the entire amount yourself. However, healthcare providers generally take the lead in getting the medical services pre-authorized on your behalf but it is ultimately your responsibility to ensure that any medical care that needs to be pre-authorized has been pre-authorized. This is essential because at the end you will have to pay the entire amount if you skip this step.
An insurance claim is the only means through which health insurance companies are notified about a health care bill. Therefore, it is important that your carrier know about your medical bill through your claim in order to pay the bill. If you use an in-network healthcare provider, then your healthcare provider will automatically send the claim to your health insurer. And if you use an out-of-network provider, then you are supposed to file the claim. You should file a claim, even if you think that your insurer will not pay anything toward a claim. This is mainly because even if your insurer is not paying your claim he should be aware of your deductible amount you have met. Thus, you should file the claim so the money you are paying gets credited toward your deductible because if your insurer doesn’t know that you are paying deductible then it can’t credit that amount toward your deductible.