I am using my health insurance for the first time, what do I need to know?
Whether you may be turning twenty-six in a few months, have just started your first job that offers healthcare benefits, or are purchasing health insurance on your own for the first time. Congrats! Although beginning something new can feel confusing or overwhelming, we hope to provide you some clarity in understanding insurance and picking the right plan. We know regardless of the circumstances, understanding and choosing the right insurance plan can seem confusing for the first time. If you're feeling overwhelmed, worried, or confused--stress not, we are here to help!
Insurance Basics
The first step in picking the right insurance plan is understanding what your healthcare needs. Do you go to the doctor regularly? Do you frequently need to see specialists? Do you utilize your mental health benefit? Do you need a plan that covers prescription drugs? Once you start getting a clear picture of your medical needs, it will be easier to narrow down your plan options.
All Costs Associated with Health Insurance
When you purchase health insurance, you are entering a contract with the insurance company on rates they have negotiated with healthcare providers that are in-network. The insurance company decides upon the prices at which healthcare professionals are paid, and healthcare professionals are not allowed to charge more/less than the contracted rate.
With that being said, your health insurance contract establishes your cost-share with the insurance company to pay for medical services. The cost-share is the way that you and the insurance company share the cost of services you use. Your cost-share responsibility is your deductible, coinsurance, and/or copay.
Premiums
Your premium is the amount you pay monthly for health insurance. If you work for a company, they might cover part or all of your monthly premium. If you are buying health insurance on your own, you may be able to receive a discounted rate at www.healthcare.gov, depending on your annual income.
Deductibles
Your deductible is the amount you need to pay out-of-pocket before your insurance company starts its cost-share. For example, if you have a $1000 deductible, you will have to pay healthcare providers directly until your deductible is met. If you visit a healthcare provider and the cost of your visit is $150, and you have to pay your deductible, you will be responsible for the total cost of the visit ($150) to the healthcare provider. Your deductible resets every year. After your deductible is met, you may have other cost-shares, including copays or coinsurance.
Individual vs. Family Deductible
Your insurance company may have different rates for individual vs. family deductibles and out-of-pocket maximums. If your individual deductible is $500 and your family deductible is $1000, you will need to meet your individual or family deductible first before your coinsurance/copay goes into effect. If you have multiple family members on your plan, they will all have an individual deductible that goes toward the family deductible. Let's say that you are married and have two children, if both of your children meet their $500 deductible, it will also go toward your $1000 family deductible. Once your family deductible is met, you will no longer need to pay your individual deductible. The same is true if you have an individual and family maximum-out-of-pocket.
Coinsurance
After your deductible is met (if you have a deductible), you may be responsible for coinsurance: a percentage of the medical visit. Your insurance company shares the cost with you in the coinsurance. For example, if your coinsurance is 20%, the health insurance will cover the remaining 80%. For your $150 visit, you would pay $30, and your insurance would cover the remaining $120.
Copay
After your deductible is met (if you have one), you may be responsible for a copay instead of a coinsurance. A copay is a flat fee that you pay for the cost of service, regardless of what the service costs.
Out-of-Pocket Maximums
Each insurance plan has a different out-of-pocket maximum that you can spend on healthcare. If your out-of-pocket maximum for in-network services is $5,000 after you have paid $5,000 in fees related to your deductible, coinsurance, or copay, the insurance company will cover 100% of costs.
What about mental health?
Many insurance plans treat their mental or behavioral health benefit differently than medical benefits. So when looking at your cost-share information for mental health, it may be different from the rest of your plan. Sometimes health insurance companies will waive the deductible or have different benefits depending on if the visit in the office or over telehealth.
The best way to learn about your mental health coverage is to look at a plan brochure that tells your cost-share information or call and speak to a representative at the insurance company. Below is a video where I will go over a couple of plan brochures to help you see costs related to mental health.
If you have any further questions about insurance plans, we recommend reaching out directly to the insurance company. They are able to provide the best information regarding costs and benefits, and we are unable to look that information up unless you have active insurance. If you have health insurance and are curious to know your coinsurance amount, please feel free to contact us.