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Understanding Your Health Insurance — You Can Do It!

By Deepi Brar | October 19, 2016 | Rally Health

It’s fall! You know what that means — pumpkins, costumes, trick-or-treaters, and … open enrollment. Actually, we’re hoping to make that last one a bit less scary this year. (Did you know most Americans would rather do their taxes than sort out their health benefits?) Before we dive in, let’s make sure we all understand what open enrollment is.

Open enrollment: The time of year you can sign up for a new health plan (and other benefits)

This usually happens in the fall — your workplace will let you know when yours is happening. It’s the time of year when any covered employee can switch to a different health plan or change other benefits.

The rest of the year you’re pretty much locked in unless you have a major change in your life, like having a baby or starting a new job. A few dates to keep in mind:

  • If you buy your own insurance through healthcare.gov or your state’s own individual marketplace, open enrollment is November 1 though January 31. If you want your coverage to start on January 1, 2017, the last day to sign up is December 15, 2016.
  • If you’re on COBRA (you’re paying to keep insurance from a job you left), it runs out 18 months from the date your coverage started. If you’re thinking of switching to a different plan, you can shop during open enrollment. Otherwise you may need to wait until your full 18 months run out.
  • If you’re shopping for a Medicare Advantage or Medicare Part D plan for prescriptions, the 2017 open enrollment is October 15 through December 7, 2016.

All good? Great! Now, let’s turn to basic health plan jargon. These are roughly in the order you’ll come across them when you’re looking at plan materials like the summary of benefits and coverage (SBC). For lots more terms, check out this list.

Common Insurance Terms

Premium: What you pay for your health insurance, usually a monthly rate

This is a fixed cost whether you use your insurance or not. In general, plans with higher premiums have better coverage — you’re paying more up front so you can pay less later. Some employers will pay part of your premium as part of your benefits (lucky you!). If you’re self-employed, you may be able to deduct your premiums on your taxes.

  • One thing to check: Whether the premium amount is listed per month or per pay period.

Deductible: How much you have to pay before insurance starts to pay

You’ll want to check this carefully. Premiums are usually lower when deductibles are higher, but if you get sick, remember you’ll need to pay the full deductible before your plan starts to help out.

Under IRS rules, a high-deductible health plan (HDHP) is one with a deductible of at least $1,300 for an individual or $2,600 for a family. Some family plans can have deductibles of more than $10,000.

  • One thing to check: whether your plan has a separate deductible for prescriptions. You don’t want to be surprised at the pharmacy.

Copayment: A fixed amount you pay for a service (also called “copay”)

A copayment is a flat fee, like $20 for an office visit or $100 for an ambulance. It’s usually printed on your insurance card. There may be a limit on the number of visits or things like chiropractic, acupuncture, and mental health.

Coinsurance: The part of the bill you pay

This is slightly more complicated. Coinsurance is your share of the final bill (such as 10 percent of lab or surgical fees). We say “final” because there’s a round of back-and-forth that usually happens when your doctor or hospital bills your insurance.

Example: The original bill might be $1,000 but the “contracted rate” for your insurance might be $700; your share will be 10 percent of that lower number. You can see the final amount on the explanation of benefits (EOB), available from your insurance company after the charge is processed.

  • One thing to check: Whether you pay a copay or a coinsurance for your prescriptions. For some expensive drugs, the coinsurance can be 40 percent or more.

In-network: A lower-cost option

Every health plan has a network of “preferred” providers, including doctors, hospitals, and labs. When you visit someone in-network you will usually have better coverage (you’ll pay less out of your own pocket). Some plans will only cover services when you see an in-network provider.

  • One thing to check: Whether your doctors and hospitals are in-network. You can usually look this up on the health plan’s website. If you have UnitedHealthcare, you can check your network here.

Out-of-network: A higher-cost option

Some plans will let you see someone outside the preferred provider network at a higher cost. Others won’t cover any out-of-network providers, which means you’ll need to pay the full amount yourself. Always check your plan coverage before you schedule any appointments.

  • One thing to check: Whether you even can go out of network. HMOs and plans called EPOs may not let you. Many people confuse EPOs for PPOs, which are more flexible. More on plan types here.

Out-of-pocket maximum: The most you’ll need to pay in a plan year

Once you hit your max, you’re done with your cost sharing (copays and coinsurance) for the year. The number will reset to zero every plan year (typically January 1, but yours could be a different date). In 2017, most plans can only make you pay up to $7,150 per person and $14,300 for a family. If your plan predates the Affordable Care Act (it’s a “grandfathered plan”),your limit could be higher.

  • One thing to check: Whether your deductible, copays, or out-of-network spending count towards your out-of-pocket cap. It varies.

Annual limit: The most a health plan will pay for your care in a year

Under the Affordable Care Act, health plans can no longer have an annual limit on how much they will pay for your essential health care.

  • One thing to check: If your plan was designed before the ACA (it’s a grandfathered plan), you may have an annual limit. It’s rare to hit this limit, but good to be aware of it.

Lifetime limit: The most a health plan will ever pay for your care.

Under the Affordable Care Act, health plans can no longer have a lifetime limit on how much they will pay for essential health care. This is true even for older grandfathered plans.

  • One thing to check: Plans can still have lifetime limits on “non-essential” services. Find out what’s considered non-essential by your plan.

Good to know

Your plan benefits often depend on which laws apply to your health plan. Here’s a little more about the main types.

ACA-compliant plan

These might also be called “ACA-approved” or “qualified” plans. The Affordable Care Act of 2010 (“Obamacare”) says that plans designed since 2010 generally must meet certain rules. Here are a few:

  • Health insurance companies can’t drop you if you get sick or refuse to cover you based on your health history (so-called preexisting conditions).
  • All plans must cover certain preventive care like mammograms at no cost to you (no deductible, copay, or coinsurance, as long as you’re in your plan’s network).
  • Plans are not allowed to set annual or lifetime dollar limits on essential health care. That means insurance can’t stop paying for care after reaching, say, a million dollars in bills.

Grandfathered plan

If your plan was designed before the ACA went into effect, it’s called a “grandfathered” plan and doesn’t have to meet all the ACA rules — check with your employer if yours is one. About 25 percent of people who get their insurance through their employers still have these older plans.

Self-insured group plan

If your company is self-insured or self-funded, it means that the company takes on all the risk — and cost — for its employees instead of a health insurance company. (Though an insurance company will typically do the claims paperwork or “administer” the plan.) The rules are complicated for these plans and they may have different coverage from ACA plans. About 63 percent of American workers are on fully or partly self-funded plans.

Deepi Brar
Rally Health