Navigating Health Insurance in the USA: Key Terms You Need to Know
A deductible is the amount you pay out-of-pocket for covered health services before your insurance plan starts to pay. Some plans cover certain services, like doctor's visits or preventive care, with only a co-pay and without requiring the deductible to be met.
This is your monthly payment for your health insurance plan. Remember, subsidies may be available under the Affordable Care Act (ACA) to help lower this cost for eligible individuals.
3. Co-pay (Co-payment)
A co-pay is a fixed amount you pay for specific services or prescriptions at the time of the visit. For some services, you might only need to pay the co-pay, and the insurance covers the rest, irrespective of whether the deductible has been met.
After meeting your deductible, coinsurance is your share of the costs of a healthcare service, usually a percentage. For instance, your plan might cover 80% of the cost of a hospital stay, while you pay the remaining 20%.
5. Out-of-Pocket Maximum/Limit
This is the most you'll spend in a year on covered services. Once you reach this limit, your insurance plan pays 100% for covered services for the rest of the policy period.
6. Network (In-Network vs. Out-of-Network)
These terms refer to the group of healthcare providers that your insurance plan has contracted with (in-network). In-network providers generally mean lower costs for you, while out-of-network services can be more expensive.
7. Pre-existing Condition Coverage
Under the ACA, health insurers can't refuse coverage or charge more due to pre-existing conditions. This ensures everyone has access to health insurance, regardless of their health history.
8. Explanation of Benefits (EOB)
An EOB is a statement sent by your insurance after you receive healthcare services. It details what was billed, what your insurance paid, and your financial responsibility. It's informative, not a bill.
9. Prior Authorization
This is a requirement that your doctor must get approval from your insurance company before a service or medication is covered, to confirm it's medically necessary.
10. HMO vs. PPO
HMO (Health Maintenance Organization) plans usually limit coverage to in-network providers and may require referrals for specialists. PPO (Preferred Provider Organization) plans offer more flexibility in choosing providers but often come with higher costs.
Additional Aspects for U.S. Consumers:
Medicaid and Medicare: Government-funded programs providing health coverage for eligible individuals based on income, age, or disability.
HSA and FSA: Options for saving money tax-free for medical expenses.
State-Specific Rules: Health insurance regulations can vary by state.
Prescription Drug Coverage: Coverage can vary significantly between plans, particularly regarding generic vs. brand-name drugs.