Today marked a historic day for the U.S. Our 45th president has been sworn into the presidency. Many people are looking to see what Donald Trump and his administration will do with regards to healthcare. While the wheels are in motion to make changes that will impact the Affordable Care Act (ACA), there are many unanswered questions.
While we wait, we thought we could provide some education to people considering getting health insurance or whose health insurance could be affected by potential changes.
Health Insurance Terms
Below are common words and phrases typically used in conjunction with obtaining health insurance. Our goal is to provide a brief explanation of each to better prepare yourself for any potential decisions you may have coming.
- Copay –a copayment is a fixed fee for a covered service under a health insurance plan that you pay at the time of service. Covered services may include all medical/health benefits that are made available to you by that plan. Typically, copays can be seen for doctor’s office visits, specialist office visits, drug prescriptions, making an emergency room visit, etc.
- Deductible — this is the amount of money that you as the individual (or family) has to pay out-of-pocket before insurance kicks in any amount of money for services. Copays generally do not accumulate towards your deductible, though in many plans they do accumulate towards your annual out-of-pocket maximum.
- Co-insurance — this is a shared percentage responsibility for you and your insurance carrier to pay bills after the deductible is met (e.g., 80%/20%) and together they always add up to 100%. So for example, a customer pays the 20% after the deductible, while the health plan pays the larger 80%. The percentage (post-deductible through annual out-of-pocket max) varies by plan.
- Annual out-of-pocket maximum — this is the most amount of money an individual (or family) has to pay in any given year. This is usually a combination of copays, deductibles, and coinsurance. Once this number is met, your insurance company covers 100% of the costs.
- Lifetime maximum — this is a term that you don’t see all too often anymore due to the ACA. Under the ACA, lifetime maximums are no longer allowed for plans issued after September 2010 for in-network based services. Prior to that, a health insurance plan was able to cap benefits (e.g., $2 million per year or lifetime). Certain grandfathered plans may still have this feature so be on the lookout for it.
- Premium — all of the variables above determine what your monthly premium (amount you pay on a monthly basis for the privilege to be insured) will be. It is important to consider how often you need covered services and what kind. Based on those factors, a high or low deductible plan could be better for you.
It is important to note that this is not meant to be an exhaustive list of what you can expect to see in a health insurance plan. Further, everyone’s situation is unique and you should evaluate it based on its own details. Just because a health plan is good for one person, doesn’t mean it will automatically be good for you. Be sure to ask the appropriate questions for your situation. It is always better to make an informed decision (if possible) than a blind one!
If you need more help with HSA decisions, check out our blog. We will make you a healthcare benefits expert in no time, without any extra work or effort on your end.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.