What is a deductible and how does it work?

Typically, a deductible is the amount of money you must pay each year before your health insurance plan starts to pay for covered medical expenses. After this deductible is met, the insurance company will pay a percentage of the bill, this is called the coinsurance.

What is coinsurance?

Coinsurance is cost-sharing where you are responsible for paying a certain percentage for a covered medical expense and the insurance company will pay the remaining percentage of the covered medical expenses after your deductible is satisfied. For a health insurance plan with 20% coinsurance, once the deductible is met, the insurance company will pay 80% of the covered expenses while you pay the remaining 20% until your out-of-pocket limit is reached for the year. Typically, the out-of-pocket limit is the maximum amount you will pay out of your own pocket for covered medical expenses in a given year.

What are co-pays?

A co-payment or co-pay is a specific amount you pay for each medical service, such as $30 for an office visit, after which the insurance company often pays the remainder of the affiliated charges.

Do I have to meet my deductible before insurance will pay when I see my doctor?

With some health insurance policies, the answer is YES, but many health insurance plans do not require this. Companies today offer plans where the deductible may only apply while hospitalized or for more major procedures. Many plans allow you to visit doctors and specialists, and fill prescriptions, with just a co-pay.

What is “out-of-pocket maximum?”

This is the amount of money one would pay out of their own pocket towards their medical expenses in any given year. An out-of-pocket expense may refer to how much the co-payment, coinsurance, or deductible is added together. Also, when the term annual out-of-pocket maximum is used, that is generally referring to how much the insured would have to pay for the whole year out of their pocket, excluding premiums.

What is a network?

A network is a list of doctors, hospitals and other providers who have contracted, or agreed, with an insurance company to do business with the insurance company. The providers fees have been negotiated, which means that the insurance company will not necessarily pay the doctor or hospital what your actual medical bills are, but will pay a lower amount. If you have a health insurance plan that utilizes a network and you use providers who are not part of the network, the amount of money that you would have to pay for those services will be considerably higher than if you use providers who are in the network.

What’s the difference between a Primary Care Physician (PCP) and a specialist?

A Primary Care Physician, or PCP, is the doctor you would go to on a regular basis, like when you’re simply not feeling well. A specialist is a doctor that your PCP might refer you to if the problem you have requires a doctor with more expertise in a certain area.

What is a pre-existing condition?

A pre-existing condition is any health condition you have or have had prior to applying for a policy. Some insurance companies want to know about all of your pre-existing conditions. Others may only look back a limited number of years.

Will a pre-existing condition prevent me from obtaining health insurance?

Maybe. It depends on the condition you have or had, its severity, the cost of medications, and whether the insurance company thinks it will lose money by selling you a policy. Some pre-existing conditions will not exclude you from getting a policy; instead, the insurance company may issue a policy to you, but they might try to offer you the policy with a “rider” which is a clause in your policy that says the insurance company will cover you, but NOT give you coverage for the specific pre-existing condition.

What if I’m currently pregnant?

No individual insurance company will sell you a policy while you are pregnant.

What is an HMO?

A health maintenance organization (HMO) provides a form of health insurance coverage that is provided by hospitals, doctors, and other providers with whom the HMO has a contract. Providers contract with an HMO to receive more patients and in return usually agree to charge less for their services. When you choose to become insured under an HMO plan, you must choose a PCP (who is contracted by the insurance company) and see that doctor for all of your health issues. If you end up needing to see a specialist, you’ll see your PCP first and get a referral to see the specialist.

What is a PPO?

A Preferred Provider Organization is another form of managed care. A PPO negotiates arrangements with doctors, hospitals and other providers who accept lower fees from the insurer for their services. As a result, your cost-sharing will be lower if you use the network of providers.

One characteristic of PPOs is the ability to make self-referrals. PPO plan members can refer themselves to doctors of their choice, including specialists, as long as those providers are also part of your PPO network. With a PPO plan, you are allowed to see providers who are not members of the network, your insurance company will only pay part of those charges, leaving you to pay the balance.

What is the main difference between an HMO and a PPO?

Most HMOs require you to select a specific doctor as your primary care physician, or PCP. This doctor is your first point of contact for most medical conditions, exceptions are made for emergencies. Your choice of specialists and hospitals is usually limited to those already under contract with the HMO, and your primary care physician is the one who generally decides whether or not a referral to a specialist is necessary.

PPOs combine some of the characteristics of HMOs with the flexibility of traditional indemnity plans. PPOs offer a specific set of doctors and hospitals that you may choose from to get discounted rates. These are called “preferred” or “in-network” providers. PPO members are free to see any in-network provider at any time. Members may also see doctors who are not in the network, but the payment for those doctors will be higher.

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