Oct 31, 2020

What are the key concepts of health insurance?

Health Insurance is complicated. What are the important things to know?

You may already know about Open Enrollment, but just in case, let’s cover it. Open Enrollment is a period of time at the end of the year when qualified individuals can enroll in health insurance for the upcoming calendar year. This year it takes place from November 1st 2020 to December 15th 2020, unless you live in one of these states that offer an extended open enrollment period:

  • California - Extended to Jan 31, 2021
  • Colorado - Extended to Jan 15, 2021
  • Massachusetts - Extended to Jan 23, 2021
  • Minnesota - Extended to Dec 22, 2020
  • Nevada - Extended to Jan 15, 2021
  • New York - Extended to Jan 31, 2021
  • New Jersey - Extended to Jan 31, 2021
  • Pennsylvania - Extended to Jan 15, 2021
  • Rhode Island - Extended to Jan 23, 2021
  • Washington - Extended to Jan 15, 2021
  • Washington DC - Extended to Jan 31, 2021

It’s a pretty short period of time to make a choice that will be with you and your family for and entire year. Unless you qualify for a Special Enrollment Period during the year, you’ll need to stick with the health plan you choose for the whole year.

It can feel overwhelming and difficult to be certain you’re getting the coverage you need. To make it easier, Catch recommends plans for you based on some basic info and preferences. We’ve also put together a quick guide (consider this your health insurance SparkNotes) on some of the most important terms to know. We promise, it’s not as stressful as it may appear.

Let’s get into it

First up, a reminder that health insurance protects against the financial costs that come with keeping you healthy. The terms below are important to understand so that you know what costs you are responsible for and what costs are covered by insurance. 

Health insurance is an agreement between you and an insurance company. Generally speaking, that deal is:

  • You agree to pay a monthly fee (premium) to the insurance company. As long as you pay on time, you are covered. 
  • In exchange, the insurance company agrees to pay for some of the costs you might have during the year. Whether or not you have these costs depends on how healthy you are next year. 

How do you know what’s covered? It’s all in the plan details. 

But don’t worry. When you’re shopping for coverage, Catch makes it easy to see how costs break down for each plan, including costs for common care like prescriptions or emergency room visits.. This makes it easy to compare and pick the best plan for you.

Here are some of the important terms to understand:

Copayment or Copay

This is the amount you’re charged each time you receive certain medical care or purchase certain medical equipment or drugs. Each plan has different copays for different services. 

For example, a plan may charge you a $25 copay for a doctor’s visit or a $15 copay for prescription drugs.

Deductible

A deductible is the total dollar amount you must pay before your insurance kicks in and starts paying a portion of your medical bills. While an annual physical or other preventive care may be covered immediately, most health care costs will not be paid by your insurance company until you have paid your full deductible amount.

For example, you have to pay for prescription drugs and the cost of seeing your doctor until the amount you’ve paid out-of-pocket reaches the deductible amount.

Plan deductibles reset each calendar year.

Coinsurance

Remember when we said the insurance company agrees to pay some of the costs you might have? Well, after you meet your deductible, your health insurance will start paying a portion of your medical expenses. You’re still on the hook for a small portion of these expenses — This is known as coinsurance 

For example, let’s say you have 20% coinsurance on your plan. After meeting your deductible, for every $100 bill you receive, your insurance company pays $80 and you will owe $20. 

Out-of-Pocket Maximum

Well what happens if you get a really big medical bill? There has to be a limit to what you need to pay in a year, right? This ceiling is known as the “out-of-pocket maximum” for your plan. It’s the total amount that you are potentially responsible for in a year including your deductible, copayments, and coinsurance. Importantly, your monthly premiums do not count toward this maximum amount. 

For example, say you got into an accident riding your bike and your total medical costs (ambulance, doctors, surgery, drugs etc.) totaled $25,000. You have health insurance with a max-out of pocket of $13,000. That means that once you have paid $13,000 out of pocket, your insurance will pay the remaining $12,000. 

Plan types:

There are different plan types that you should be aware of:

  • HMO or “Health Maintenance Organization” Plans: These plans have a physician network that provides care. Unless it’s an emergency, you must use a physician within the network or risk having to pay your full medical bill out of pocket. You will also need to get a referral from your primary care physician in order to see a specialist like a podiatrist or dermatologist. These restrictions help keep costs down which means these plans are often cheaper options.
  • PPO or “Preferred Provider Organization” Plans: Similar to HMO Plans, PPO plans also have provider networks. However, with a PPO plan, if you use an out of network provider, a portion of your bill may still be covered. You also won’t need a referral to see a specialist — you can access them directly. 
  • EPO or “Exclusive Provider Organization” Plans: Similar to an HMO plan in that you’ll need a primary care physician from within a specific network. While you’ll need to stay in that network for any non-emergency care, you are able to receive care from a specialist without a referral from your primary care provider. 

Benefit Levels (Metal Tiers)

You may have noticed that health insurance plans are categorized into different levels called metal tiers. There are four different tiers: Bronze, Silver, Gold, and Platinum. 

Plans are grouped based on the amount of medical costs that are covered for the average person. Importantly, metal tiers do not mean the quality of healthcare is better or worse.  Bronze plans have the lowest monthly cost, but covers the least amount of medical costs for the average person. 

  • Bronze - covers 60% on average of your medical costs; you pay 40%
  • Silver - covers 70% on average of your medical costs; you pay 30%
  • Gold - covers 80% on average of your medical costs; you pay 20%
  • Platinum - covers 90% on average of your medical costs; you pay 10%

Special enrollment

A year is a long time to have the same health insurance. What if your life changes enough that you need to reconsider what health insurance coverage you have? Well, you may qualify for a Special Enrollment Period. 

Outside of Open Enrollment, this is the only period of time where you can choose a different health plan than you already have. You typically have 60 days from a qualifying event to get new coverage. Some common qualifying life events include:

  • Moving to a new address
  • Turning 26 years old
  • Losing your existing health coverage
  • Getting married or divorced
  • Adopting or having a child


Check and see if you qualify for a Special Enrollment Period here:

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