To Understand Your Health Insurance Policy, You Must First Learn These 4 Terms

February 11 17:22 2018 by ushadmin

Like every social, political and economic policy in our country; health insurance is complicated. We started with an already complex system. Then Affordable Care Act (ACA) was passed, setting up insurance “exchanges” that offer consumers and small businesses a choice of health plans. While hugely beneficial to many, definitely muddied already murky waters. Then just when I started to understand ACA, Trump starts to dismantle it. But politics are only part of the blame in the healthcare jumble. God forbid you are navigating through the Consolidated Omnibus Budget Reconciliation Act (COBRA), Medicare or Medicaid.

With all of this chaos, is it any wonder that most Americans don’t understand their own health insurance policy? A 2016 survey identified four key health insurance terms necessary for a basic knowledge of healthcare: deductible, co-insurance, co-pay, and out-of-pocket maximum . It found that just 4% of Americans are able to correctly define all four terms. My theory? We all put our hands over our ears and yell “LALALALA” anytime we hear anything related to healthcare. It’s all too much, we’re never going to get it, so why bother? We’ll just sit in the mandatory new employee orientation, nod our heads at the appropriate times, and Snapchat under the table.

But it doesn’t have to be like this. So let’s all take a cleansing breath, and start basic. If you can grasp the above four terms, you can comprehend the basics of your policy. And you’ll be ahead of 96% of Americans.

Deductible: The amount you pay for covered health care services before your insurance plan starts to pay. For example, a $1,000 deductible means you pay the first $1,000 of covered services yourself. Copays and premiums usually don’t count towards deductible.

Co-payment (Co-pay): The fixed amount you pay for a covered service. If your co-pay is $20, you pay $20 at the time of each visit. Some plans have no co-pays. Sometimes you don’t have to pay a copay until you reach your deductible.

Coinsurance: The percentage of costs of a covered health care service you pay after you’ve met your deductible. Let’s say your co-insurance is 20% (you have a 80/20 plan). You go to the doctors and it costs $100 total. Once you’ve met your deductible, when you get bill you pay $20 and insurance pays $80…