Health insurance is a contract between you (or your employer) and the insurance company that says that the insurance company will pay a portion of your medical expenses if you get sick or hurt and have to visit a doctor’s office or hospital.
The contract, or policy, spells out what the insurance company will pay for and how much of the bill you will have to pay. However, the amount of your bill that the insurance company will pay, and under what circumstances they’ll pay it is known as coverage and can vary greatly from policy to policy.
For example, the policy may cover an office visit, but you may have to pay a $20 co-payment. Or, the policy may not cover anything until you’ve paid an agreed upon amount out of your pocket, which is known as a deductible. Once that is met, you may have to pay a percentage of the cost, called coinsurance. These deductibles, co-payments, and coinsurance, along with any other non-reimbursable expense you may pay is referred to as an out-of-pocket-expense.
Often, the total amount of co-insurance you have to pay in a given policy is capped by the policy’s maximum. The policy will also state the amount you have to pay each month for the coverage, known as the premium.
The ACA (Affordable Care Act, sometimes referred to as “Obamacare”) mandates that all health insurance contracts under its jurisdiction must cover IN FULL certain medical expenses to ensure you don’t get sick. These are called Wellness Benefits.
The ACA also removed lifetime maximum benefit limits from most health insurance policies and prohibits most commercial health insurance plans from denying coverage because of pre-existing conditions.
Types of Health Insurance
Group Health Insurance
The majority of people under the age of 65 have medical insurance through their employers’ group insurance. This is usually because employers and other organizations can get better rates because they have a large number of people to cover. The insurance company sees it as good risk because they’ll probably end up paying out very little for many people in the group, while collecting premiums from everyone.
Most employer’s group insurance plans are managed care plans, typically either PPOs or HMOs. PPOs allow you to see any medical provider, but you usually pay a lower out-of-pocket cost at In-Network (or Participating) providers. HMOs restrict which medical providers you can see, and NO BENEFITS are paid if you see an out-of-network (or Non-Par) provider.
Individual Health Insurance
For people under age 65 who are not covered by a group health insurance policy, individual plans are available through state and federal exchanges created under the Affordable Care Act (ACA). These plans vary in price and covered benefits by location, and some offer reduced premiums/or out-of-pocket expenses to those who qualify based on income. NO ONE can be refused coverage under these plans because of pre-existing conditions.
National Health Insurance
The federal government also has health insurance programs for those who are eligible. Medicare is health insurance for people age 65 or older, those who are under age 65 with certain disabilities, and people of all ages with end-stage renal disease (those with permanent kidney failure requiring dialysis or a kidney transplant). Medicare includes hospital insurance (Part A), medical insurance (Part B) and prescription drug coverage (Part D).
Alternatively, Medicare beneficiaries can choose a Medicare Advantage plan (Part C) if they are willing to give up their Medicare Part B coverage, as well as giving up the right to have a Medicare Supplement plan/or prescription drug (Part D) plan. This is an important consideration, because Medicare Supplement plans (also called Medigap plans) cover most, if not all, of the out-of-pocket expenses not covered by Medicare Parts A and B. Also, Medigap plans CAN refuse coverage to anyone past their initial 6-month eligibility for Medicare because of pre-existing conditions.
Medicaid is a state-administered health insurance program available to certain low-income individuals and families who fit into a recognized eligibility group. You must meet very specific requirements and considerations that include age, pregnancy, disability, blindness, income, resources, and U.S. citizenship or a lawfully admitted immigrant. These rules can vary from state to state.
Tricare is a federal health insurance program for both active-duty and retired military personnel and their families. Several different levels are benefits are available based on military-defined eligibility criteria.
No matter what type of insurance you have, please understand that your medical providers DO NOT DETERMINE YOUR BENEFITS. Although we contact your insurance company to ask how your insurance plan will cover services we provide, the decision to cover ANY service is completely up to your insurance company. We do not choose or administer your benefits.
Your insurance company will provide you with an EOB document- an Explanation of Benefits – when they process your claims. BE SURE TO READ IT CAREFULLY! If they didn’t provide the benefits you expected, PLEASE CALL YOUR INSURANCE COMPANY to ask how they processed your claim (yes, they do make mistakes sometimes, and YOU are their customer- insist that they provide the benefits they promise in their contract with you!
Portions of this information were taken from Lee Ann Obringer & Melissa Jeffries “Understanding Health Insurance” 4 February 2006. HowStuffWorks.com.