Anyone who has ever had to deal with health insurance can attest to how frustrating it can be. The terminology in healthcare can also get pretty complicated, so this post will help you to understand what's what.
The world of health insurance can be confusing for anyone. It is important for everyone to understand health insurance, regardless of whether they are business owners or employees.
How Does This Affect You?
The way we educate employees and ourselves about healthcare is something we all need to improve. According to a CNBC study, only 4% of Americans are able to identify basic health insurance terms like copay (a fixed amount paid to a doctor, lab, or pharmacy) and out-of-pocket maximum (the maximum amount paid to quality services in a calendar year).
Knowing basic terms will make navigating health insurance easier and ensure employees pick the right coverage to meet their needs and manage their health care expenses.
1. Health Insurance Lingo
Make sure that you know enough about your health insurance to maximize your coverage and get the benefits you are paying for.
You will encounter tons of terms throughout your life when dealing with health insurance, but our ebook "The ABCs of Health Insurance" has you covered. It explains everything from deductibles (the amount you must pay out of pocket for covered health services) to premiums (the monthly cost of your insurance plan).
How should you choose between an HMO, an EPO, a PPO, or a POS? Your needs will vary depending on your individual circumstances. Plan type determines which doctors you can see and how much out-of-pocket expense you'll be responsible for. In HMOs (Health Maintenance Organizations), there are a limited number of doctors and specialists offered and referrals are always required. EPOs (Exclusive Provider Organizations) offer only in-network (may provide out-of-network coverage in an emergency).
With a PPO (Preferred Provider Organization), you may see providers both in-network and out-of-network, but out-of-network providers may charge higher fees. As for POS plans, they are "gated," which means the member must choose a Primary Care Physician (PCP) as his or her "point of service." Any of those plans can be an HDHP (High Deductible Health Plan), that offers members lower insurance premiums. A good decision requires a thorough understanding of all the information available to you.
There are several factors that influence the cost of health insurance, such as the monthly premium and deductible, as well as how often you get care. In case your insurance does not cover care, you are responsible for copayments and coinsurance (after the insurance company pays its percentage).
According to some PwC analysis, four out of five insurance-covered adults paid less than $1,000 in out-of-pocket expenses during a year. In some PwC research, four out of five insurance-covered adults paid less than $1,000 in out-of-pocket expenses during an average year.
