UPDATE: President Biden has opened a special enrollment period for the Affordable Care Act health insurance plans for 2021. You can now enroll in one of these plans until August 15, 2021, at healthcare.gov. Some states have their own open enrollment periods and websites for signing up. Check to see if your state does. We also have more information about how to get insurance and learn what kinds of plans to watch out for.
As we all prepare for 2019 open enrollment, which goes from November 1, 2018 to December 15, 2018, we thought now would be a good time to brush up on the health insurance basics. If you’ve ever been mystified by a health insurance bill—or if you’re navigating health insurance on your own for the first time, talking about benefits with a potential employer, or just want to get a better handle on insurance in general—these are some health insurance terms you should know.
Health Insurance Lingo: A glossary
Benefit: A benefit is any health service (like an appointment or operation) or medical item (like an IUD or prescription medication) that your insurance pays for in full or in part. When people refer to things being “covered” by insurance, those things are benefits. You should be able to find out what your benefits are by calling your insurance company or by checking their website.
Premium: Your premium is the set amount you pay for insurance, usually on a monthly basis. If you get insurance through your job, your employer may pay some or all of the insurance premium on your behalf. Monthly premiums don’t include other potential costs, like copays or deductibles.
Copay (short for copayment): A copay is a fixed amount you pay towards the cost of an appointment or medication when your insurance company is paying the rest. Copays are an “out-of-pocket” expense, and are often paid at the time of the appointment. Luckily for us, the Affordable Care Act (also called the ACA or ObamaCare) requires all insurance plans to cover birth control, well-woman visits, and all sorts of other good stuff without a copay. (BTW, if you are still paying out of pocket costs for birth control, here’s how to deal.)
Co-insurance: Co-insurance is like a copay, but instead of a fixed amount, you pay a percentage of the cost of an appointment or service.
Deductible: A deductible is the amount you have to pay for health care in a year before your health insurance starts covering costs. For example, if you have a $1,500 deductible and you undergo a $2,000 procedure, you will pay the first $1,500 and your insurance will pay the remaining $500. If you have a higher deductible, your monthly premium will probably be cheaper, but if you have an unexpected health cost, you will have to shell out the cash before insurance kicks in. A happy caveat: Currently under the ACA, health insurance plans have to pay the full cost of preventative services, like birth control and well-woman visits, even before you meet your deductible.
Out-of-pocket maximum: Your out-of-pocket maximum is the maximum total amount you’ll ever have to pay out of pocket for covered services in a year. If you hit this amount by paying deductibles, copays, and coinsurance, then your health insurance will pay the full cost of all covered benefits from that point on, for the rest of the year. You may not ever hit this amount.
In-network vs. out-of-network: Insurance companies negotiate with certain health care providers to lower costs—those providers are in their “network.” Typically, your out-of-pocket costs will be higher when you see an out-of-network doctor or specialist. Some insurance plans don’t offer out-of-network benefits at all, which means that if you see an out-of-network provider, you will have to pay the whole cost yourself. Most health insurance companies make it easy to find in-network providers on their website. Always ask before you see a provider whether they participate with your insurance plan.
Claim: A claim is an invoice that your provider/clinic/hospital sends to your health insurance company. It explains the health service(s) you received (like a mammogram) and what the cost was so that your insurance company can pay its portion of the bill.
Dependent coverage: Dependent coverage is health insurance for the “dependents” (such as children, spouse, or partner) of someone who has a health insurance policy (often referred to as the “policyholder”).
Explanation of Benefits (EOB): An EOB is a form from your insurance company that lists everything they have helped pay for during that statement period. EOBs are sent to the “primary enrollee,” which could be your parents if you are on a family plan. If you’re on your parents’ plan and would prefer to keep your health care info private, you may be able to get your EOBs sent to you directly.
Drug formulary: Sometimes called a “prescription drug list” or “preferred drug list” (PDL), a drug formulary lists the prescription medications your plan covers and explains how much each will cost you out of pocket. Often, brand name drugs will be much more expensive than their generic version. (That may be true for birth control, too.)
Health savings account (HSA): An HSA is an un-taxed savings account that can only be used to pay for health care. Only people with high-deductible insurance plans are eligible for HSA accounts (an annual deductible of $1,350 or more for self-only coverage is considered a high deductible). You can usually set up an HSA through your bank.
Pre-existing condition: A pre-existing condition is any health condition you have before you get covered by new health insurance. Under the ACA, health insurance companies can’t deny you coverage or charge you more because of a pre-existing condition.
HMO vs. PPO: These are umbrella terms for two of the most common types of health insurance plans. (There are also EPOs and POSs, but those are less common).
Health Maintenance Organizations (HMOs) generally have lower premiums and no deductible, but if you want to see an out-of-network doctor, you have to foot the entire bill yourself. Also, HMOs often require you to get a referral from your primary care provider if you want to be covered when you see a specialist.
Preferred Provider Organizations (PPOs) tend to have higher monthly premiums, but you are still covered when you see out-of-network doctors (although you might pay a fee). If you have a PPO plan, you shouldn’t need a referral to be covered when you see a specialist.
Phew, that wasn’t too bad!
Health insurance can feel like one of those I’ll-never-really-get-it-so-why-bother-trying things, especially because every plan is different. But don’t let that deter you—insurance companies pay people to take your calls and answer your questions. And if you have a question about getting your birth control covered, the National Women’s Law Center will help you out. You can call their toll-free hotline 1-866-745-5487, or email CoverHer@nwlc.org.
Don’t forget, open enrollment for 2019 health coverage goes through December 15th! Insurance may end up being cheaper than you think. So whether you’re currently uninsured or just want to see if there are better options than your current plan, now is the perfect time for a visit to HealthCare.gov.