Your personal health is extremely important, which is why having good coverage and understanding it is critical! Choosing the right policy is vital, and so it is always a great idea to use a local health insurance agent. Regardless of how you get your insurance, there are a few facts that are important to know to help you better understand your policy!
- Out-of-pocket maximums
When you hear the term above, it is referring to the maximum amount of money that you will have to pay in one year for medical care covered by your policy. This may seem simple and obvious, but around 40% of Americans don’t know what the term means. For example, if you have an out-of-pocket maximum of $5,000, you will never pay more in a year than that $5,000 for the care your policy covers. Once you hit this amount, you are done paying for covered medical care. You need to remember that this only includes services that the insurance company will cover. If you need something that insurance won’t cover, then you would still have to pay for this out of your own pocket. The monthly premium you pay does not go towards this out-of-pocket maximum. The good news is that your deductible does count! Be aware that the out-of-pocket max may be higher than your deductible.
The majority of Americans understand terms such as deductible and premium, but many don’t know what coinsurance is. Coinsurance is the amount you will have to pay after your deductible is met. Make sense? If not, here is an example. In this scenario you have already covered your deductible, and you still have a $1,000 medical bill. Your coinsurance is 20%, which means that your insurance company will pay $800 of that $1,000, and you will be responsible for the remaining $200. This might seem scary if you have a huge medical bill, since you most likely won’t have tens of thousands of dollars laying around. But you don’t need to worry, because as covered in the last point, your policy will have a maximum amount you have to pay in a year. So once you hit this, you no longer will have any coinsurance costs.
- In-network vs out-of-network
If at all possible, you should always use in-network doctors or other health care providers. It is much more expensive to use out-of-network providers. There are a few different reasons for this cost difference.
- Many insurance companies actually have a higher deductible if you use any health care provider that isn’t in-network.
- It is also common for the out-of-pocket max to be much higher for out-of-network. So, you could be responsible for a much larger portion of any medical bills.
- Coinsurance will likely be higher for out-of-network. In our example earlier, if you normally had 20% coinsurance, you instead might have to pay 50%.
- Health insurance companies negotiate with in-network providers to ensure that certain services are priced at set amounts. This means that if you visit an out-of-network doctor, and normally your health insurance company pays $100 for this visit, but the out-of-network doctor charged $150, you will likely have to pay the difference.
These are a few of the reasons that it is so important to understand what these different terms mean. It can change based off of the policy, and this is why it is important to talk to your health insurance agent about this topic.
Understanding these terms will help you have a better experience interacting with your health insurance and will prevent frustration. As you can see, there are many different terms and aspects to a health insurance policy that are good to know, and you probably aren’t going to learn them all. This is why you should avoid using the internet to sign up for a policy, but instead, it is suggested that you talk to a health insurance agent. It is free and easy!