Health insurance is complicated. While it’s something we all have a need for, almost none of us are formally taught what the options are, what to look for, or what circumstances might indicate a propensity for one plan over another.
There are many types of health insurance. Insurance can come through a commercially-insured employer, a self-insured employer, a partially self-insured employer, or the government (Medicaid, Medicare, or The Marketplace - also known as the Affordable Care Act or ACA).
Usually, there are several different payers (also called insurance companies) to choose from and each payer has several plan options. Plans range in price depending on the type and amount of coverage.
Your premium is your monthly payment. If you have your health insurance through an employer, the employer may pay a portion of your premium and you must pay the balance. Your premium is most often automatically deducted from your paycheck. Those on Medicaid may have no premium as it is paid for by the government. Individuals who elect insurance through The Marketplace may be eligible for a tax credit that covers a portion of the premium, depending on income.
Whatever health insurance plan you choose, you should receive a card that indicates your policy holder information, as well as documentation to accompany it. Your documentation should explain the terms of your policy including information related to copays and deductibles.
Copays are a specific dollar amount you are required to pay for doctor visits or prescriptions. (You may also hear reference to coinsurance. That’s when you are responsible for a percentage of the bill.) Copays are usually paid at the time of service. Your deductible is the out-of-pocket amount you are responsible for before your insurance company starts paying for you. Depending on your plan, you may have a deductible for all care or just for some types of care. There’s also something called an out-of-pocket maximum. That is the most you’ll have to pay in one year for the benefits your plan covers.
It’s important to know who is within your Provider Network (also called in-network). Those are practicing clinicians and pharmacies associated with your insurance plan. When you receive services in-network they are provided at a discounted rate. While some types of insurance plans will allow you to go out-of-network, you could end up paying a significant amount more - or even full price. On a similar note, a formulary is a list of drugs that are covered by your insurance. It’s often cheaper to purchase the generic drug rather than the brand name.
Additional information to consider:
Your employer, Marketplace Navigator, or insurance representative can help answer these questions and more. Call the number on the back of your insurance card for information specific to your policy.
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The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose