Transcript University of Georgia Navigators Welcome to the Marketplace

Health Insurance Basics
Joan Koonce, Ph.D., AFC®, CPFFE
Professor and Financial Planning Specialist
Health Insurance Basics
What is Health Insurance?
• Health insurance is a contract between a
consumer and an insurance company.
• Health coverage helps people pay for
medical costs and protects them from
very high expenses.
• With a plan, insurance companies and
consumers both pay for health care.
Health Insurance Basics
Health Insurance Terms
• The premium is the amount paid for
health coverage. Consumers and/or their
employers usually pay it monthly,
quarterly, or yearly.
• Premiums vary depending on:
health care coverage and
deductibles, copayments and coinsurance.
Health Insurance Basics
Health Insurance Terms (cont.)
• The deductible is the amount
consumers owe for health care
services before the health insurance
or plan begins to pay.
Generally, a plan will have two
deductibles: in-network and out-ofnetwork deductibles
Health Insurance Basics
Deductible Examined
• Consumer has a $1,200 deductible
• Consumer has a medical procedure and is
charged $1,200
• Insurance company only allows $1,000 for
procedure
• Insurance company pays nothing, consumer
pays $1,000 and has $200 of deductible amount
left
Health Insurance Basics
Health Insurance Terms (cont.)
• The copayment (or copay) is a fixed amount
(e.g. $15) consumers pay for a covered
health care service, usually at the time of
service.
 Copays vary by the type of covered service, such as seeing a
doctor, filling a prescription, or going to the emergency
room.
 Co-pays may be lower for services delivered by primary care
doctors than by specialists.
 Copays for in-network providers are typically lower than for
out-of-network providers.
Health Insurance Basics
Health Insurance Terms (cont.)
• Coinsurance is the percent of the cost
of covered health care services paid by
consumers.
• The consumer pays coinsurance plus
any deductibles and copayments that
are owed.
Health Insurance Basics
Coinsurance Examined
• Consumer has met the deductible
• Consumer has a 80/20 coinsurance
requirement
• Consumer has $100 in covered medical
expenses
• Insurance company pays $80 and
consumer pays $20.
Health Insurance Basics
Health Insurance Terms (cont.)
• The coinsurance cap or stop loss
provision places a cap on the amount
of money the consumer pays for
covered services after the deductible.
• Coinsurance caps do not apply to
copayments.
Health Insurance Basics
Health Insurance Terms (cont.)
• Claim is a request for payment that a
consumer or healthcare provider
submits to the health insurance
company for items or services
rendered.
Health Insurance Basics
Health Insurance Terms (cont.)
• Allowed amount is maximum amount allowed
to be paid for covered health services by a
health insurance company.
• May also be called “eligible expense,”
“payment allowance,” or “negotiated rate.”
• If a provider charges more than allowed
amount, the consumer usually doesn’t have to
pay the difference (if using a participating
provider).
Health Insurance Basics
Health Insurance Terms (cont.)
• Balance billing: when the provider bills
the consumer for the difference
between the provider’s charge and the
amount allowed by the health plan.
Health Insurance Basics
Balance Billing Examined
• If the provider charges $100 and the allowed
amount is $70, the provider may bill the
consumer for the remaining $30.
• Some providers may not balance bill consumers
for covered services. This is the case with a
preferred or participating provider.
• It’s important to understand a plan’s provider
network and whether it costs more to see
certain providers.
Health Insurance Basics
How to Get Insurance
Health insurance
inside the
marketplace –
Consumers can
enroll in health
coverage through
the marketplace
beginning on
October 1, 2013.
Health insurance
outside the
marketplace –
Consumers can
obtain health
coverage through a
health insurance
company that sells
insurance outside of
the marketplace.
Job-based
insurance –
Consumers who are
currently employed
may be able to
purchase health
coverage through
their employer,
called employersponsored or jobbased.
If consumers lose or quit their job,
they may extend the job-based
health insurance through a program
called Consolidated Omnibus
Budget Reconciliation Act
(COBRA). Instead of choosing
COBRA, consumers may also role
in coverage through the
marketplace instead.
Insurance under a
parent’s policy –
Younger adults ( up
to 26 years old) are
eligible to enroll in
health coverage
under their parents
health insurance
plans if those plans
cover dependents.
Health Insurance Basics
Additional Health Coverage Options
Medicare –
Medicaid – a
Medicare is the
federal health
insurance program
for people who are
65 or older,
certain younger
people with
disabilities, and
people with EndStage Renal
Disease (permanent
joint federal and
state
administered
health insurance
program for low
income families
and children,
pregnant
women, the
elderly, people
with disabilities,
and in some
states, other
adults.
kidney failure requiring
dialysis or a transplant,
sometimes called ESRD).
.
Children’s
health
insurance
program
(CHIP) - a
program jointly
funded by state and
federal government
that provides
health coverage
to low income
children and, in
some states,
pregnant women,
and families who
earn too much to
qualify for
Medicaid, but they
cannot afford
private health
insurance.
TRICARE – is
the Department of
Defense (DoD)
healthcare
program available
to eligible
members and
their families of
the seven uniform
services: the US
Army, US Navy, US
Air Force, US
Marine Corps, US
Coast Guard,
commissioned
Corps of the US
Public health
service, and the
National Oceanic
and Atmospheric
Administration.
Veteran affairs
(VA) health
benefits – the
Department of
Veterans Affairs
(VA) administers a
variety of benefits
and services that
provide financial
and other forms of
assistance to
service members,
veterans, their
dependents and
survivors. As part
of these benefits
and services, the VA
provides health
coverage for eligible
veterans who
served in the US
military.
Health Insurance Basics
Different Types of Health Insurance Plans
Health Insurance Basics
Types of Health Insurance Plans (cont.)
•
Preferred Provider Organization (PPO) - a type of
health plan that contracts with medical providers,
such as hospitals and doctors, to create a network of
participating providers.




Consumers pay less if they use providers that belong to the
plans network.
Consumers can visit doctors, hospitals, and providers outside
of the network at an additional cost.
Referrals are often not needed to see specialists.
In exchange for greater access to providers, premiums are
generally higher in a PPO than in an HMO.
Health Insurance Basics
Types of Health Insurance Plans (cont.)
• Point of Service (POS) Plan – a type of plan in
which consumers pay less if they use doctors,
hospitals, and other healthcare providers that
belong to the plan’s network.
 With this type of plan, a consumer may go to outof-network providers at a higher cost.
 POS plans may also require consumers to get a
referral from the primary care doctor in order to
see a specialist.
Health Insurance Basics
Types of Health Insurance Plans (cont.)
• Health Maintenance Organization (HMO) - a
type of health insurance plan that usually
limits coverage to care from in-network
doctors who work for or contract with the
HMO.
 It generally will not cover out-of-network care
except in an emergency.
 An HMO may require consumers to live or work in
its service area to be eligible for coverage.
 In exchange for the limited access to providers,
premiums are typically lower in an HMO than in
other types of plans.
Health Insurance Basics
Types of Health Insurance Plans (cont.)
• High Deductible Health Plan (HDHP) - a
plan that features higher deductibles
than traditional insurance plans in
exchange for lower monthly premiums.
 HDHPs can be combined with a health
savings account (HSA) or a flexible
spending account (FSA).
Health Insurance Basics
Types of Health Insurance Plans (cont.)
• Catastrophic Health Plan – a type of plan
that is designed to provide emergency service
and to protect consumers from unexpected
medical costs, but has limits on regular doctor
visits.
 The premium amount that a consumer pays each
month for health care is generally lower than
other types of plans.
 Out-of-pocket cost for deductibles, copayments,
and coinsurance are generally higher than other
plans.
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