Coinsurance- percentage divided between patient and insurance company to pay a remaining claim after the deductible is met. The insurance company will pay a certain percentage, 60% for example, leaving the remaining 40% to the responsibility of the member. There are coinsurance maximum amounts designated by each plan that will limit the out of pocket cost for a member in a benefit year. This amount is usually several thousand dollars and when the maximum is reached the member’s responsibility is complete and the insurance carrier would then pay for 100% of the remaining cost for deductible/coinsurance related claims for that benefit year.
Copay- amount you pay at an office visit, primary or specialist. The primary copay can range from $5 to $50. The specialist copay is usually twice the primary amount. Plans also have copays for prescriptions and these amounts are determined by what type of drug you are taking: generic, brand name, or specialty medication. Generics are known to be a much more affordable option for patients when available compared to brand name drugs.
Deductible- amount of money, usually ranging from $250 to $10,000 (though most are between $1,000 and $5,000) that would be applicable for any major service such as surgery, hospital stay, outpatient procedures, etcetera as designated by your plan.
EOB (explanation of benefits)- statement member receives from carrier for each processed claim providing information about how the claim was paid and what amount, if any, is due from member to provider.
Open enrollment- designated period of time that a member has to make plan changes for the following benefit year without penalty or requiring a qualifying event.
Premium- cost of the insurance plan which member must pay to carrier to keep policy in place.
Preventive Care- services considered to be critical to the monitoring of general health or prevention of diseases for all members. Most plans will pay for these services in full with no cost to the member as an incentive to promote preventive care and awareness of general health. This is an opportunity to see your primary care physician once a year to have a physical and check blood pressure and cholesterol, etc. Similarly, dental plans cover a preventive exam and cleaning with your dentist once every six months.
Types of health plans:
PPO- this is the “traditional” plan most people are used to. It has coverage for in and out of network, though out-of-network coverage is less, and also copays for doctor visits and prescriptions. There is also a deductible & coinsurance percentage for major claims.
HDHP/HSA- gaining popularity, this type of plan has 2 key parts. The high deductible health plan (HDHP) at the insurance carrier & a health savings account (HSA) at the bank of the member’s choice. Together, these two components give the member tax benefits & very good coverage after the deductible is met. Preventive is free, but all other services including prescriptions are paid by the member to accumulate the deductible amount. Once the deductible is reached, the health plan pays the coinsurance percentage. It is usually recommended that the member have a plan that pays 100% after deductible, which ensures the member’s cost is better controlled each benefit year. Think of the HSA as a tax sheltered money market account that can be used for medical purposes. It can be used to reach the deductible, pay for qualified medical expenses for family members (even those not on the member’s health plan), dental expenses, and prescription glasses/contacts/sunglasses. A complete list of qualified medical expenses can be found at the IRS website as they designate the rules of this type of account. They also establish deposit limits for the account each calendar year.
HRA- a Health Reimbursement Account is an option for employer’s when offering group benefits to their employees. Essentially, it is an account set up to pay the members back if they incur a certain amount of medical costs that are deductible/coinsurance based. For example, if a group plan previously had a $1,000 deductible and then changes to a $2,500 deductible. The employer can set up the HRA to pay members back if they incur a deductible charge over $1,000. The theory behind this type of plan is that most members do not meet the deductible and therefore an employer can obtain a full year of lower premiums by having a higher deductible plan.
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