Millions of Americans are unfamiliar with basic health care terms that impact their out-of-pocket costs and ability to find a doctor. During the individual open enrollment period for 2019, which begins Thursday, Nov. 1 and closes, Saturday, Dec. 15, 2018, people can make important coverage decisions and enroll, adjust or switch their health care plan.
In preparation for open enrollment, it’s important for people to clearly understand these concepts to make the most informed decisions regarding their health coverage.
- Copayment: A copay is a fixed-dollar-amount a patient is expected to pay for health care services. Scheduled doctor visits typically range between $25 and $50, depending on the plan. This cost is generally paid at the time of the visit, rather than billed later.
- Coinsurance: This term refers to the percentage of covered health care services a patient is expected to pay after a deductible is met. If a person’s health insurance plan has a 20 percent coinsurance, the individual is then expected to pay 20 percent of each medical bill.
- Deductible: The amount a patient must pay on covered health care services before an insurer starts contributing. Throughout the year, these payments go toward an annual deductible. Once the deductible is met, patients share the cost with the health insurance company by paying coinsurance and copays until the total benefit maximum is reached.
- Explanation of Benefits (EOB): An explanation of benefits letter outlines the amount of each service an insurer has paid for, which services are not covered by insurance and why, as well as any charges due for services received.
- Health Savings Account (HSA): A health savings account (HSA) can help prepare for current and future health care expenses. Individuals decide how much to contribute to their account every year and can use these funds to pay for IRS defined qualified medical expenses. An important reminder—savings roll over year-over-year without limit and are kept tax-free, grow tax-free and can be withdrawn tax-free for medical expenses at any time. These accounts work with qualified high-deductible PPO and HMO health plans.
- Premium: Health insurance premiums refer to the standing cost of coverage, typically charged every month by an insurer. This reoccurring payment can vary based on the plan type and level of coverage.
- Provider Network: A provider network is determined by a health care plan. Opting for an in-network doctor versus out-of-network can drastically affect the cost of services. Health insurance mobile apps or websites, like bcbsm.com, are great places to confirm a current or new doctor is covered under a specific plan. Utilizing digital tools like the “Find A Doctor” function makes it easy for individuals and families to identify the best provider for their needs. It’s also important to contact clinics directly to ensure services are covered.
- Special Enrollment Period: This refers to special time periods when individuals can enroll for health insurance outside of the standard open enrollment period. Qualification for special enrollment is dependent on the occurrence of major life events, including childbirth, changes in eligibility, change in residency, death of a plan member, loss of a job or loss of coverage through a family member.
- Subsidy: Health care subsidies offer an opportunity for eligible individuals and families to access more affordable health coverage. These funds can be applied to a monthly health insurance premium to ensure coverage for those unable to afford higher payments. Eligible individuals and families can earn up to 400 percent of the federal poverty level per year.
- Total Benefit Maximum: This is the total dollar amount an insurance company will pay during an individual’s lifetime for health care services considered non-essential, such as chiropractic care, orthotics and services like acupuncture. Non-essential benefits differ between health plans, so it’s best to look at your plan details to determine what your plan considers non-essential.
Rick Notter is the director of Individual Business at Blue Cross Blue Shield of Michigan.
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