Health insurance is an important part of personal coverage. As important as it is to cover your personal property, your home, and your car, it is even more important that you and your care are covered. Healthcare coverage isn’t only important for possible major medical events, but also for coverage of routine healthcare.
Health insurance is designed to cover two major causes: accident coverage, and sickness coverage. An accident is unintentional bodily injury caused by an unforeseen event, like a car accident, or falling out of a tree. Sickness is a need for medical care due to a cause other than an accident resulting in bodily injury.
As you know healthcare changed over ten years ago with the creation of the affordable care act (ACA). This act has made it possible for millions of people to purchase healthcare coverage who at one time did not have access to it, usually because of financial circumstances. The ACA can provide assistance with paying monthly health insurance premiums based on income. The ACA also defined minimum benefits required to be covered by all individual health insurance plans. Each state and each county within our states offer different plans, but each plan must include the following:
As part of the ACA’s essential health benefits, when an emergency occurs no pre-authorization is required, or can be required by insurers regardless of the facility used for emergency treatment.
Every individual health plan subscriber and dependent must have a designated primary care provider who serves as their usual source of medical care.
The health insurance marketplace replaced the old system that required each individual to contact the insurance carriers themselves. Now in one place, individuals can see all the available plans in their county, view offered premium assistance, choose a plan, and verify their doctors and medications are covered by certain plans.
You read that right, free. The ACA focuses on improving the wellbeing and overall health and disease prevention of the U.S. population; therefore, the ACA provides one free annual routine health exam.
Other than grandfathered individual health policies, the ACA eliminated restrictions or exclusions on the treatment of health conditions that existed prior to coverage under a new plan.
With the creation of the ACA, an annual enrollment period was formed called “Open Enrollment.” To enroll or purchase a health insurance plan you may only do so during the open enrollment period. It is during this time that health insurance policies are updated, introduced, changed, or removed by insuring companies. This is also the time when you will review your household information and choose your health plan for the upcoming year.
Under certain conditions a special enrollment period (SEP) may allow the change of a plan outside of open enrollment. An SEP can be triggered by things such as moving to a new zip code, marriage, change of income, loss of qualifying coverage, and the birth of children. While those are examples, an SEP is determined by the marketplace, and not your insurance agent.
The ACA made it possible for anyone to enroll in a health plan regardless of health, age, gender, and any other factors that may indicate usage of the healthcare system. The guaranteed issue is still subject to the enrollment period.
When looking at healthcare coverage, there are a few terms you will see a lot, and here we will define those for you.
Maximum Out-of-Pocket (Max Out of Pocket (MOP)): Every health plan has a stop-loss feature referred to as the maximum out-of-pocket cost. This means the amount listed as your max out-of-pocket will be the most you will have to spend out-of-pocket for medical care. Once that MOP has been met, you do not have to pay anything out-of-pocket for medical care for the rest of the policy period, with the exception of co-payments and pharmaceuticals. The MOP will reset every year.
Deductible: A deductible is an amount of money you, the insured, are responsible for paying before your policy pays anything. A deductible can apply to both medical services and pharmaceuticals.
In healthcare, a policy deductible is set to the plan as a whole and applies to medical services, and pharmacy products and services that don’t have a copay amount. Normal co-pay services are standard doctors’ visits, and standard generic pharmacy drugs. However, a service rendered such as emergency care or laboratory work don’t usually have copays, therefore there may be some out-of-pocket costs because of a policy deductible. Depending on the deductible and the cost of service, out-of-pocket expenses may occur for the first few events. As an example, if you need to get stiches for a cut that will cost $1,700, and you have a $600 deductible, then you will pay $600, and your medical plan will pay the remaining $1,100.
Another example is, if the policy deductible is $2,500 and services are only $1,200, then the deductible hasn’t been met, so the full $1,200 must be paid out of pocket. The good news is, once you’ve paid the $1,200, the amount left to meet the deductible is reduced by $1,200, leaving $1,300 left in out-of-pocket expenses before the plan begins to pay. Once the policy deductible has been met, you will not need to meet the plan deductible until next policy year.
Low, to no cost plans with very high deductibles are called catastrophic plans, and are designed to cover catastrophic medical costs such as expensive emergency care, procedures, and hospitalization. These plans often have deductibles into the thousands of dollars.
Co-pay: A copayment is an amount you pay to your provider or pharmacy for services or products rendered regardless of their “retail” price. You pay the co-pay amount, and the plan pays the rest for the product or service. Any co-payments do not apply to any policy deductibles.
Co-insurance: Co-insurance is a cost sharing method. Depending on your plan, the co-insurance amount may appear as: 70%/30%, 80%/20%, or 90%/10%. The first number (higher number) is the percentage of the medical cost the insuring company will pay, and the second number (lower number) is the percentage you will pay. These co-insurance amounts are usually used for potentially high-cost services or products such as blood laboratory work, emergency services, and expensive specialty brand pharmaceuticals. Here’s an example of how co-insurance works. An emergency room visit costs $5,723, and your plan has an 80/20 co-insurance amount. You will pay 20% of the cost, which would be $1,144.60, and the insuring company would pay 80%, which is an amount of $4,578.40.
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