With the recent adoption and implementation of the Affordable Care Act, millions of Americans are now enrolled in health insurance and can enjoy the benefits of being covered. However, a disturbing 42% of Americans are unable to properly define what a deductible is, 62% of Americans are incapable of distinguishing between an HMO and a PPO, and 37% of Americans are completely unaware of the penalty they will face for not having health insurance.
While having health insurance is beneficial and now required by law, Americans need to know what they are paying for and how they can best utilize all of their benefits. Here are some important terms every American should know:
Coinsurance – The amount you pay to share the cost of covered services after your deductible has been paid (i.e. if the insurance company pays 80% of the claim, you are responsible for the remaining 20%).
Copayment – The flat fee you pay for certain medical expenses (i.e. $10 for every visit to the doctor), while your insurance company pays the rest.
Deductible – The amount of expenses that must be paid out of pocket before your insurance policy starts paying.
HMO – A Health Maintenance Organization (HMO) is a type of managed care health plan where members choose their physician from a list of approved health care providers which typically results in lower premiums and/or copayments. The benefits of a Health Maintenance Organization (HMO) can differ depending on the company and group plan.
Network – The group of doctors, hospitals, and other health care providers that insurance companies contract with to provide services at discounted rates. You will generally pay less for services received from providers in your network.
Out-of-Pocket Maximum – The most money you will pay during a year for coverage. It includes deductibles, copayments, and coinsurance, but is in addition to your regular premiums. Beyond this amount, the insurance company will pay all expenses for the remainder of the year.
PPO – A Preferred Provider Organization (PPO) is a managed care health plan that allows plan participants relative freedom to choose the doctors and hospitals they want to visit. Obtaining services from doctors within the health insurance plan's network, called "preferred providers", results in lower fees for policyholders; however, out-of-network doctors are still covered.
Rider – Coverage options that enable you to expand your basic insurance plan for an additional premium. A common example is a maternity rider.
If you have any questions regarding health insurance, please contact Mitchell & Mitchell at 888-512-8878.