Have you ever felt like one of the kids in this video and heard yourself say "uhhh" when you see the words deductible, copay, or in-network?
Maybe you even work in healthcare or HR but have a hard time clearly explaining healthcare insurance lingo to the average person. Well, bookmark this blog or take a screenshot on your phone so you can always refer to it when you need help remembering your HSA from your FSA.
Let’s start with a basic one. Your deductible is the amount of money you have to pay on your own for medical expenses before your health insurance will start paying for it. So if you have a $5,000 deductible that means that until you’ve paid for $5,000 worth of medical expenses in a year, your insurance won’t cover anything. It’s important to note, that despite the deductible, there are some services that your health insurance will cover no matter what. For example, most health plans must cover certain preventive services — like shots, screening tests, and certain wellness visits — at no cost even if you haven’t met your deductible.
Your monthly payment for your health insurance plan. Typically, the lower your monthly premium, the higher your deductible.
This is the percentage you pay for a medical expense after meeting your deductible. Let’s say your coinsurance is 20 percent. If your doctor visit is typically $100, you now only pay $20 after you’ve met your deductible.
This is a fixed amount that you pay toward certain medical services whether you’ve met your deductible or not. Every plan has different services they cover, and different copay amounts. Typically, the lower your monthly premium, the higher your copays.
Here’s a unique one. Sometimes, certain medical expenses such as prescription drugs can be really expensive and require large copays. There are copay assistance programs that pharmaceutical companies or charities offer in order to help patients pay for medical expenses.
In most insurance plans there is a network of doctors and hospitals that your insurance has contracted with for healthcare services. They have agreed to charge you and your insurance a certain amount for each service in exchange for the insurance sending patients their way. If you go to doctors and hospitals in your insurance’s network, you pay less, and your expenses go toward your in-network deductible. If you go to a doctor or hospital out-of-network you will often pay more and may get additional “surprise bills” that leave you on the hook for the difference between what your insurance is willing to pay and what the hospital or doctor charges. The tricky part is some hospitals that are in-network may have doctors that are out-of-network… just another reason why healthcare is confusing.
Since you still pay some expenses even after meeting your deductible, health insurance plans have out-of-pocket maximums for deductibles, copays, and coinsurance. If you meet this maximum in a year, your insurance will cover 100% of all medical expenses that fall under their network of qualified services. This typically only comes into play to keep you from owing an exorbitant amount if you or your family have a major medical incident. The tricky part is, this doesn’t include care that is considered out of network.
It stands for health savings account. These are only available with high deductible plans and exist to help people pay for medical expenses. It works like a normal bank account (you even get a debit card) but you’re only supposed to use it on medical expenses. You choose how much money to pull from your paycheck each month to go into your HSA so that you have money set aside dedicated to healthcare. The government sets a limit on how much you can contribute to your HSA each year, but the money is yours and rolls over even if you don’t use it all that year.
This stands for flexible spending account. These are only available through an employer’s benefits program. This account is also used to pay for medical expenses, but with an FSA it’s a “use it or lose it” deal. Any money leftover at the end of the year doesn’t roll over, unlike an HSA.
There are of course a lot more health insurance terms than the ones listed above, but these are some of the most common that you’ll run into the most. Knowing these will give you a better understanding of how your health insurance works, and can help you explain it to others. Plus, knowing these can save you a ton of money when shopping for care.