Guide to Understand Health Plan

Health Insurance Basics

Health insurance is a way to help pay for health care expenses. Like car insurance or home insurance, you can choose from a variety of plans to meet your budget and health care needs. To fully understand what your health plan does and does not cover, you will want to contact your insurance plan to request a Summary of Benefits and Coverage. This will include information such as your Deductible, Co-Payment amounts and your In-Network and Out of Network benefits.

Health insurers and group health plans will provide the 180 million Americans who have private insurance with clear, consistent and comparable information about their health plan benefits and coverage. Specifically, the regulations will ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices. The forms include:

- An easy-to-understand Summary of Benefits and Coverage.

- A uniform glossary of terms that are commonly used in health insurance coverage such as "Deductible" and "Co-payment."

For more information about Medicare and Medicaid coverage, click on www.CMS.gov.

How Insurance Plans Work

No matter which health insurance plan you choose, you’ll pay a monthly payment (your premium) to keep your health insurance coverage. You may also be required to pay each time you receive medical care ( co-payment or co-insurance). Generally, the higher your premium, the lower your deductibles and out-of-pocket costs – and vice versa.

deduct-premium chart

Health insurance plans vary in what services are covered and the amount the insurance company will pay. The term cost-sharing is often used to describe the portion of costs covered by your insurance that you pay out of your own pocket. This generally includes deductibles, co-insurance, and co-payments, but it doesn't include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. When the amount you pay reaches the out-of-pocket maximum, the insurance company pays for all covered services. Under the new health care reform law, almost everyone must have health insurance or pay a penalty.

What is a Health Savings Plan?

Health savings accounts (HSAs) are like personal savings accounts, but the money in them is used to pay for health care expenses. You — not your employer or insurance company — own and control the money in your HSA. The money you deposit into the HSA account is not taxed. To be eligible to open an HSA, you must have a special type of health insurance called a high-deductible plan. Health savings plans are optional, should a person want to cover medical expenses from the health savings plan.

Why were health savings accounts created?

HSAs and high-deductible health plans were created as a way to help control health care costs. The idea is that people will spend their health care dollars more wisely if they're using their own money

For your convenience, we've provided a glossary of commonly used terms in the healthcare insurance industry.

Click here to access the Glossary.