Confusing Insurance Terms, Translated into Normal English
Trying to choose an insurance plan is like reading a technical manual in a foreign language. It’s kind of ridiculous that something that has to do with two very important things -- life or death situations and your bank account -- can be so unintelligible. To help you out, sympathetic public health experts compiled what one of them called “the top WTF terms in health insurance,” translated into words you actually know.
Insurance term: Open enrollment
What it really means: The period you're allowed to sign up for next year's insurance
Most insurance companies allow you to choose your coverage for the next year during one specific amount of time, called "open enrollment," unless you've changed jobs or had a qualifying life event. If you're going the Obamacare route, this means… now! Like, until January 31! So get on it!
Insurance term: Premium
What it really means: Your monthly bill
"Premium" makes it sound like you're getting something good, like premium channels or something. Not in health insurance, though! The premium is your monthly bill, and if you get your health plan through work, your company will usually cover part of the premium, with the rest taken out of your paycheck.
When you choose your health plan, you can choose how much the bill will come out to. The normal human answer is: “I want to pay zero dollars because you can’t put a price on my health!” Unfortunately, that’s not how it works in America. Which leads us to:
Insurance term: Deductible
What it really means: How much you have to pay out of pocket before insurance kicks in
A deductible is probably like a discount, right? Nope. Your insurance company doesn’t pay for the cost of your health care until it adds up (within that year) to the magic number that is your deductible. So who pays? Well... you, actually. Some plans have a $0 deductible, which means you don’t have to drop a bunch of cash before your insurance starts helping out. But if your deductible is $2,000, any meds, any emergencies, and all doctor’s visits (except physicals, in most cases) are on you. After that adds up to two grand, the insurance company finally moves a pinkie.
As you might expect, the plans with the lower premium (good) usually have the higher deductible (bad). “Think of it as a see-saw,” suggests Beth Baker, Director of Health Access and Wellness Services at the Boston Public Health Commission. “When one thing goes down, something else is going to go up.” The other things on the see-saw are copay and coinsurance (up next). Pro tip: If you’ve hit your deductible already, it’s the end of the year, and you still need to see a doc for something, do it before that deductible resets.
Insurance term: Copay
What it really means: How much you have to pay when you see a doctor
A copay the amount you pay every time you go to the doctor. You might have a $20 copay to see your regular doctor (primary care physician), and a $30 copay to see a specialist (like a dermatologist), for example. That number depends on your plan.
Insurance term: Coinsurance
What it really means: It’s like a copay, but it’s a percentage of the cost of a doctor visit, not a set price
Instead of being constant, like copays, a coinsurance is the share of the cost you owe when you see a doctor. “Coinsurance can be very dangerous because you really have NO IDEA what you will be charged,” says Julie Eisen, a public health expert at a New York City network of community health centers. “You are paying 10%, 20%, 30%, or 40% (depending on the plan you pick) of an unknown visit cost — and this means surprises on your bills.” And not the birthday cake kind of surprises. What’s more, neither copay nor coinsurance count toward your deductible. You start handing over the copays for “covered” services right away, and coinsurance only really kicks in after your deductible anyway. They do both (thankfully!) count for something, a different (higher) number known as the "out-of-pocket maximum."
Speaking of which...
Insurance term: Out-of-pocket maximum
What it really means: The maximum total amount you as an individual can spend on your health care
The out-of-pocket maximum is a limit on how much is leaving your pocket -- good thing this exists, but if you thought the deductible was bad, this number’s even higher. If you really aren’t doing so hot and handing out copays and coinsurances left and right (way after you’ve surpassed your deductible), you will finally be allowed to put your hands back in your pockets and keep them there when you reach the out-of-pocket max. The caveat? This is true specifically for essential health benefits, things the government requires insurance companies to cover. For non-essential health benefits, the insurance provider can have its own limits on how much of your care it’ll fund until it turns its back and says it’s your problem: an annual or lifetime limit.
Insurance term: Annual or lifetime limit
What it really means: How much the insurance company will cover until you're on your own
A lifetime limit sounds just a little intense, but they’re not talking about your lifetime, just the time that you’re enrolled on your plan. Since people change insurance plans more frequently than ever, you can relax (a little). If you have a serious condition that involves many non-essential payments, there's a point where your plan stops covering them, with a lower limit for the year (annual) and a cumulative limit over the course of your enrollment (lifetime).
One of the big things the ACA (Obamacare) did was eliminate the lifetime limit for essential payments -- things you absolutely have to have. Now they can only stop paying for non-essential benefits.
Insurance term: PPO
What it really means: A type of insurance company that lets you see any doctor you want
A Preferred Provider Organization gives you some flexibility on which doctors you see, though the ones "in network" (more on that to come) are considerably cheaper. Hypochondriacs who want to see a cardiologist for that weird chest feeling, a gastroenterologist for the stomachache, and an ENT specialist for the sniffles all in one week can make those appointments themselves. Insurance aside, it's probably not a great idea to do that unless you really have to.
Insurance term: HMO
What it really means: An insurance network that requires you to see your primary care doc before going to anyone else
Expanding the acronym to Health Maintenance Organization doesn't really help much, does it? HMO plans are usually somewhat cheaper than PPO plans, but you can’t just go around making appointments with anyone you damn please. You have to choose a primary care doc, and you need that doc’s official referral if you want to go to a neurologist for your migraines.
Insurance term: In-network provider
What it really means: A doctor pre-approved by your insurance company
This one’s not so complicated! Each insurance company has providers (doctors) with whom it has made cost agreements. There are usually lots of them, and they aren’t hard to figure out -- just look online or do that old fashioned pick-up-the-phone-and-call thing. If you go to one of the in-network doctors, you’re getting the maximum insurance coverage you can, given your plan. Meanwhile, if you go out-of-network, your plan will cover 0-100% of the cost. The most useful statistic you’ve ever seen, right!? But seriously, it all depends on your plan.
Thankfully, the life-or-death situations don’t count here. “Typically, if you have an emergency situation, like you're dying, you've been hit by a car, you don’t have to ask which hospital is in-network or out-of-network,” clarifies Baker. “In those situations the rules about in-network and out-of-network don't apply.” But if you’re not dying, figure it out before making an appointment.
Insurance term: Out-of-network provider
What it really means: Any other doctor
Basically this is any doctor who doesn't have an arrangement with your insurance company. Easy enough, though you may still be able to get your insurance company to pay some of the cost, so don't resign yourself to paying full freight if you have to go out of network.
Insurance term: HSA
What it really means: "Health Savings Account." Tax-free money taken out of your paycheck and put into an account owned by you forever, only to be spent on health care expenses.
You can contribute pre-tax money to health savings accounts because it can only be used for qualified health stuff (like deductibles and copays, above, not your fancy $50 foot cream or your protein shakes). It’s owned by you forever, it carries over from year to year, but you can only contribute to it if you have a plan with a designated high deductible. The idea is that you may have out-of-pocket costs (money you personally have to pay), but it’s not so bad if you have a special account that you can’t accidentally deplete on a Saturday night.
Insurance term: FSA
What it really means: "Flexible Spending Account." It's like an HSA, but doesn't roll over year to year or if you change jobs
Unlike an HSA, an FSA is owned by your employer, and you usually don’t get to keep the money from year to year or if you leave the company. So if you know for sure that you're going to have health care costs in a given year, this might be your best option.
Insurance term: FML
What it really means: Fuck my life.
This is something you'll be saying when you're staring down all the different plans and trying to decide how much you want in your FSA, wishing you were born in Canada, or anywhere else really, GOD, why does health insurance in this country have to be so difficult?!
Just kidding. You can do this! These are the buzzwords you want to be cognizant of as you’re flailing in the sea of information that is choosing an insurance plan. Keep in mind that, as Baker says, “There's one plan that's going to be the best, technically, but the reality is it depends a lot on your circumstances.” Do you have lots of prescriptions? Do you expect to see a doctor often? If you unexpectedly had bills, could you pay them?
“It's really, really important to understand the implications,” adds Baker. Given each plan you’re considering, “If you were to have an illness or to get into an accident, what would the financial implications of that be?” And even once you have a plan, the more you know about all this nonsense, the better -- you’ll know how to work with the system, and if you get a bill that doesn’t seem right, you’ll know to speak up. “Sometimes when it comes to health-related issues, people are less inclined to question -- you feel like you're in a vulnerable position. But you should always ask questions and advocate for yourself,” says Baker.
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