The time is upon us! Time to make decisions about your health insurance options for next year. For many people, that means combing through pages and pages of jargon and confusing terminology regarding their health policy.
Never fear! Here are some easy definitions to help you make sense of it all.
What is a Premium?
Premium is the monthly payment you must pay in order to be covered by your health insurance policy. This is set when you purchase the policy and will usually adjust from year to year. Your premium will typically be determined by your age, use of tobacco, type of plan, and other factors.
What is a Deductible?
A deductible is the amount that you, as the insured, must pay before your insurance company will pay anything. Deductibles usually range from as low as $100 to over $15,000. The lower your deductible, the higher your monthly premium.
You will usually have two deductibles on a health insurance policy, an individual deductible and a family deductible. Your individual deductible is per person. Your family deductible is usually a multiple of the individual deductible. For example, if two people in the family meet their deductible for the year, all the other individuals in the family will be treated as if they had met their individual deductible as well.
What is Coinsurance?
Coinsurance is a percentage of the covered expense that the insured must pay. Coinsurance usually will start after the deductible is met. For instance, if an insured’s coinsurance is 20%, after the deductible, they must pay 20% of the bill up to the out of pocket limit. Coinsurance sometimes is 0%, which means that after the deductible is met, the insurance company will pay 100% of the covered bills.
What is an Out of Pocket Limit?
An out-of-pocket limit is the maximum you will have to pay out of pocket for covered services. This is one of the most important numbers to pay attention to when shopping on the health insurance marketplace, as if tragedy struck and you had a large medical expense, this is the amount that you would most likely need to pay. This, like the deductible, is usually tied to the amount of your premium. The lower the out of pocket limit, the higher your premium.
On most insurance policies, the out of pocket limit is in the thousands. It can be daunting to think of having to pay this amount at one time. One popular option to get peace of mind is to use supplemental insurance policies to cover this amount. A supplement policy will pay you a specified sum of money in case of an accident or serious illness. The nice thing about these policies is that you can use these payments for anything, not just for medical expenses. For a small additional premium per month, you can close this important coverage gap.
What is the difference between an HMO & a PPO?
An HMO is a Health Maintenance Organization. It is one of the most common types of health plans. In an HMO, you usually must select a PCP, or primary care provider, from a network of doctors that are contracted with the health insurance company. Your PCP is your primary doctor that oversees your medical wellbeing. Generally, this doctor will have to provide a referral in order for you to see a specialist. Health maintenance organizations keep cost lower by limiting the doctors you can see to their network doctors that will accept predetermined rates for services.
A PPO is a Preferred Provider Organization. A PPO is usually a little more flexible than an HMO, provides a larger network of doctors, and even offers some out-of-network benefits. Some PPOs don’t require you to have a primary care physician referral in order to see a specialist. Some don’t require you to select PCP at all. However, the flexibility that a PPO offers will usually come at a price. PPOs typically have higher monthly premiums than HMOs.
What if I Have More Questions?
If you have more questions about health insurance, give us a call at 615-919-1009 and we will do our best to help you! If you are looking for affordable health insurance, we offer Tennessee individual health insurance on and off the marketplace, Medicare Advantage plans, Medicare Supplement plans, dental plans, vision plans, accident plans, critical illness plans, and more. We are always here to help! Give us a call today!