Shopping for a new health insurance plan doesn’t always happen during the standard open enrollment each fall. There are special enrollment periods: times when individuals can enroll in a health plan due to certain major life events.
Having a child, changes in eligibility, changes in residency, death of a plan member, loss of a job or loss of coverage through a family member are all times when an individual can enroll in a new health plan. Additionally, some individuals may now no longer qualify for a Medicaid plan – and may need to buy their own health insurance for the first time since the pandemic.
There is a health plan for everyone – whether it’s a plan offered through an employer as a benefit to workers, or a plan individuals purchase themselves through the marketplace at healthcare.gov.
Finding the right health plan that matches an individual’s wants and needs means considering some key factors: Does the plan cover an individual or a family? Will the plan members need mostly routine preventive care throughout the year and benefit from the lower premiums of an HMO? Or will plan members need to frequently see doctors and specialists throughout the year to manage a condition and benefit from the lower deductibles of a PPO?
If these questions and concepts are unfamiliar, take time to learn these health care terms to help guide the decision-making process.
Availability of subsidies
Health plans are available for individuals of all income levels. For low-income households, subsidies are available to help pay for health insurance. Subsidies are not loans to be paid back; they are financial assistance to help lower the out-of-pocket costs of health care. Getting a subsidy depends on a person’s income compared to the Federal Poverty Level, as well as their age, family size and the market price of health insurance where they live.
For example, if an individual makes about $34,000 or less, or a family of four that makes about $69,000 or less, they may qualify for both types of subsidies:
- The Advanced Premium Tax Credit subsidy, which lowers monthly health insurance payments or premiums.
- The Cost Sharing Reduction subsidy, which reduces the out-of-pocket costs paid during a policy period – usually a year – for health care services received. This type of subsidy is only available on Silver plans.
Individuals can check to see if they are eligible for subsidized savings on a marketplace health plans here at healthcare.gov.
Types of health plans
Whether shopping the individual marketplace or evaluating the health plan options available through an employee benefit package, there are two main types of health plans to choose from: HMOs and PPOs.
- HMOs, or Health Maintenance Organizations, have their own network of doctors, hospitals, and healthcare providers that an individual’s insurance company agrees to pay for. HMO members are required to select a primary care provider who will be their partner in health care.
- PPOs, or Preferred Provider Organizations, offers flexibility when choosing health care options. Those with this type of plan can go to any health care professional they want without a referral — inside or outside of their network. Staying inside their network means lower out-of-pocket costs. When traveling outside their network, higher out-of-pocket costs will arise and not all services are covered.
Health care terms to know
Weighing the pros and cons of different health plan offerings means understanding the financial benefits that each one brings. Here are some of the most common terms used to describe health insurance benefits:
- Copayment: A copay is a fixed-dollaramount a patient is expected to pay for health care services. 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% coinsurance, the individual is then expected to pay 20% 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 out-of-pocket maximum is reached.
- 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.
- Out-of-pocket maximum: This is the most an individual would have to pay for in-network covered services in a plan year. After an individual pays this amount – through deductibles, copayments and coinsurance – their health plan will pay 100% of the cost of covered benefits.
- 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. It’s also important to contact clinics directly to ensure services are covered.
- 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.
Health insurance plans offer many low and no-cost preventive care benefits – including annual physicals, screenings for chronic conditions and vaccinations. Preventive care services are some of the most important health care visits individuals can make to support their whole health. These services help save lives through early detection.
Rick Notter is vice president of individual business at Blue Cross Blue Shield of Michigan.