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How to Decode Your Health Care Plan

Choosing a health care plan can be an overwhelming experience. For 2020 coverage, Medicare’s annual election period began Oct. 15 and will end Dec. 7, while Marketplace open enrollment runs from Nov. 1 to Dec. 15. Before choosing a plan, it’s important to understand the terms and concepts surrounding each one. When properly informed, consumers can make better choices regarding their health care options.

Types of Health Plans

When it comes to coverage, there are multiple plans available. Yet, some have specific restrictions regarding physician, pharmaceutical and additional medical services. The most prevalent types are:

  • HMO (Health Maintenance Organization): With an HMO, a primary care physician helps to facilitate a patient’s treatment. This includes preventive services like a routine checkup or immunizations, as well as providing referrals for specialists (i.e. a cardiologist or podiatrist). HMOs can be limited to in-network care or a specific service area.
  • Medicare Advantage: During the annual election period, one can sign up, disenroll or change their Medicare Advantage (Part C) plan. Offered through private insurance, it provides hospital, medical, prescription, dental, vision and hearing coverage. There’s also an annual limit for out-of-pocket costs, meaning once you reach a certain amount, Medicare pays for 100 percent of the remaining services.
  • Medicare Prescription: Medicare’s prescription drug plan (Plan D) is optional coverage that works alongside Original Medicare (Part A and B) and Medicare Advantage. Subscribers are required to pay a monthly premium, copays or a potential deductible. Like Advantage, one can enroll during the annual election period.
  • PPO (Preferred Provider Organization): Unlike an HMO, this plan doesn’t rely on a primary care physician to manage one’s treatment. Referrals are not necessary to see specialists and oftentimes, members can opt for out-of-network coverage. Although, in-network care is more affordable as it requires little to no copay.

Common Health Care Terms

For some, health care terminology can be confusing and intimidating. But it’s important to know what terms mean and how they affect coverage.

  • Coinsurance: This is the percentage of covered health care services a patient is expected to pay after a deductible is met. If a person’s insurance plan has a 20% coinsurance, the individual is expected to pay 20% of each medical bill.
  • Copayment: A copay is a fixed dollar amount the 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.
  • Deductible: The amount a patient must pay on covered health care services before an insurer starts contributing. Throughout the year, these payments go towards 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.
  • 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 websites or mobile apps, like bcbsm.com, are great places to confirm if a current or new doctor is covered under a specific plan.
  • Total Benefit Maximum: This is the total dollar amount an insurance company will pay during an individual’s lifetime for non-essential health care services. Examples include mental health and substance use treatment, maternity/newborn care and preventive services such as the flu shot.

About the Author: Rick Notter is the director of Individual Business at Blue Cross Blue Shield of Michigan.

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Photo credit: Rob Daly

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