What’s in a Health Insurance Policy

by Travis Etheridge

Like all other insurance coverages and plans, health insurance provides monetary assistance for you and your family in the event of injury and illness. Like a home, it is likely one of the biggest investments you will make in your lifetime. There are different types of health insurance policies;

Individual Coverage– You can purchase your own health insurance policy for yourself and your family from insurers directly.
Group Coverage– Plan premiums are divided between beneficiaries and the institution that facilitates the group coverage like a company or a college.
Employer Sponsored: Employers usually pay more than 50% of the monthly premium, and may support premiums for employee dependents such as spouses and children.

With policy types also comes the selection of your policy structure. Below are the most common structures offered:

HMO- Health Maintenance Organization; requires policyholders to select a primary care physician and then only receive treatment and care from physicians and specialists within the established provider network.
PPO– Preferred Provider Organization; a structure that contracts with medical providers and hospitals, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network.
HSA- Health Savings Account; an account used solely to save money that is used for future medical expenses. Money in this account is used for medical expenses of the account-holder or his/her dependents and is non-taxable.
FSA– money can generally be used to cover a wider range of medical expenses and medications than HSA.

So now that you know the type of plan you have or want to purchase, and the structure of the plan, understanding the components of a policy will help you select the best policy. Let’s start with what most people are familiar with:

Premium– The amount you pay your insurance company for health coverage each month or year.
Deductible- The amount of money you must pay out-of-pocket before coverage kicks in
Co-pay– Like co-insurance, but with one key difference: rather than wait until the deductible has been paid out, you must make your copayment at the time of service.

To obtain the best coverage for yourself and your family, you must understand the way health insurance works and what terms mean. Learning the fundamental concepts that govern health insurance is crucial. Let’s get started!

In addition to your premium, deductible, and co-insurance, the following items are just as important. Understanding these terms will help you understand a health insurance policy.

Co-insurance– The amount of money you owe to a medical provider once the deductible has been paid
Out of Pocket Max– The most you will have to pay during the policy year for healthcare services.
In and Out of Network– In-network: refers to physicians and medical establishments that deliver patient services covered under the insurance plan. In-network providers are generally a cheaper option for policyholders. Out of Network: refers to physicians and medical establishments not covered under your insurance plan. Services from out-of-network providers are usually more expensive than in-network providers.
Waiting Period– Some employer-sponsored insurance plans mandate a period of 90 days, usually your probation period, before employees can enroll in insurance plans.
Pre-Existing Condition– This one gets a lot of talk. Any chronic disease, disability, or other condition you have at the time that you apply. With the ACA Pre-Existing Conditions became a non-factor when applying for health insurance under the Affordable Care Act.
Open Enrollment – The window of opportunity during which you can apply for health insurance or make changes to a plan to include your spouse and/or children. Policyholders are unable to change their plan until the next open enrollment unless they experience a qualifying event.
Qualifying Event– A change in your situation; i.e., birth of a child, adoption, marriage, losing health coverage.
Cobra- Under Cobra (Consolidated Omnibus Budget Reconciliation Act) employees who lose their group coverage under certain circumstances can obtain continuation coverage for a certain period.

Ultimately, your health insurance must be suitable for you and your family. Some additional considerations for selecting the best health insurance policy: costs, benefits, and doctors & specialist. What does the plan cost? Can I afford it? Do I need a plan this expensive? Is it safe to go with a cheaper plan based on my health status? What are the benefits of the plan? Any restrictions such as total visits allowed? Is your current doctor in that plan’s network?

We hope that this has helped you understand health insurance! Please feel free to reach out to us with any questions or concerns on your health insurance.