When I was but a young wide-eyed girl living in DC, I got a job offer to work in the sports industry. I was so excited to get started, filling out my paperwork knowing nothing about what I was doing. I remember briefly glancing at my benefits not knowing what any of it meant and signing my name at the bottom saying that I understood. Oh but how little I grasped.
I am now working as a health insurance broker and am so surprised at how little I knew and how much I took my health plan for granted. I now go to the doctor whenever I have a tummy ache because, hey, I can.
Here are 8 terms you should know. I’ll try not to be boring.
Don’t roll your eyes — you’d be surprised that people don’t understand this as well as they should. Your deductible is the number often in the name of your health plan that tells you how much you need to pay before your health carrier starts paying. Most people will never hit their deductible, so if your plan has a high deductible and you’re relatively healthy, you don’t need to panic too much. If you’re worried about it, you can purchase indemnity plans that are generally affordable that will help cover an unforeseen accident, a hospital stay, critical illness, you name it.
A copay is what you pay for a doctor’s visit, for example. This does not apply to your deductible. For example, outside of your covered annual visit (that means you all should be going to the doctor once a year at the minimum!!!), you will pay a $30 copay (or whatever your plan says). Most of the time, you will have a co-pay plan or an HSA plan. I personally prefer the copay plan because I don’t have to worry about breaking the bank every time I go to the doctor.
A health savings account is just what it sounds like. You can put money into it (pre-tax, might I add) and when you need to use it for a medical expense, you can use your account. I used to have an HSA plan and contributed to it monthly, and when I got on a co-pay plan I was still able to use my account towards co-pays and other medical expenses. Once you are on a co-pay plan, however, you cannot continue contributing to your account. These are great plans for people who don’t go to the doctor very often or people who can commit to setting aside money into their account every month and who don’t mind not having copays. These are not great plans for people like 23 year old me who went to urgent care and had to pay a $400 bill. It’s all a matter of preference, but be vigilant!
This is not the same thing as a copay. The plans I typically recommend do not have coinsurance because it overcomplicates things and it’s inconvenient to you, but sometimes it’s unavoidable. For example, if your plan says something like “80/20” at the top, that means that after you hit your deductible, you will still have to continue to pay 20% of your bills until you hit your OOP max (out of pocket).
5. Maximum Out of Pocket (OOP)
This is not the same thing as a deductible. Let’s say you have a $3000 deductible plan with a $6000 max out of pocket and 80/20 coinsurance. You will be responsible for the first $3000 and 20% of everything after $3000 until you hit $6000.
6. PPO/ HMO
Network access is super important to pay attention to when you’re evaluating your benefits plan. PPO (preferred partner organization) networks are usually the best and typically come with group plans, aka plans offered by your company. HMO (health maintenance organization) networks are typically much narrower and more restrictive. Unfortunately, if you are not on a group plan and you are looking at individual plans, keep in mind that you will most likely have to be on an HMO plan.
This stands for the Affordable Care Act aka Obamacare. The biggest benefit of the ACA is that these plans are guaranteed issue, therefore you do not need to go through a health evaluation. The biggest downside is these are expensive and not ideal for millenials. Companies should always see if they can get through underwriting before signing up for an ACA plan.
8. Rx Plan
This is just your prescription plan. There are typically three drug tiers: Generic, Preferred, Specialty. Always try to get generic and yell at your doctor if they prescribe you something else when you know there’s a generic equivalent. They will typically always try to prescribe you generic, but doesn’t hurt to ask
I can always talk about more terms, but this is a good start. Also, ask your friends and family for broker recommendations! You don’t have to pay anything extra and they will guide you through the process and be your liaison between you and the carrier. I promise it’s worth it.
If you are confused and ever need someone to take a look at your health plan, you can send me an e-mail at firstname.lastname@example.org. I’d be happy to help.