When the Patient Protection and Affordable Care Act (PPACA, but also known as Obamacare) was passed, it opened the door for many more people to purchase health insurance. This was due to several reasons, including tax subsidies for lower income individuals, the elimination of pre-exisiting condition exclusions, and the requirement that all Americans purchase health insurance or face a tax penalty. With all these new people enrolling in medical plans there is sure to be a lot of confusion as to what these benefit provisions mean. Here are some of the most important things to look out for.
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The very first thing you will want to look out for in a plan is the deductible. A deductible is the amount of money that you will be required to pay out of pocket before the insurance plan pays anything. For example, if you have a $1,000 deductible and you have a $400 claim, you will be required to pay $400 and the insurance company will pay nothing.
If you need medical services again, and the claim is $2,000, you will pay the remaining $600 of your deductible, and the insurance company will pay $1,400.
Once the deductible is met in a given year you will not have to pay anything else towards the deductible. After the year is over, the deductible resets to $0.
Like the deductible, a copay is a flat dollar amount that you pay for medical services. The difference is that a copay is paid per service. If your insurance plan has a $30 copay for an office visit to the doctor, then you will pay $30 every single time you go to the doctor. After the copay is paid, the insurance company picks up the rest.
There are different copay amount for different services. Primary care physicians, specialists, urgent care clinics, emergency rooms, inpatient hospital stays, and outpatient hospital stays have their own separate copay many times.
Coinsurance is the percentage of a medical bill that you are required to pay. The coinsurance is usually represented by the amount that an insurance company will pay. For example, if your benefit plan calls for 90% coinsurance, and your hospital bill subject to coinsurance is $1,000, insurance will pay $900 and you will pay $100.
Usually deductible and coinsurance work together. You will pay your deductible amount, and then coinsurance will kick in.
One thing to keep an eye on is the coinsurance difference between in-network medical providers and out-of-network medical providers. In-network coinsurance is typically more favorable for the policyholder.
An out-of-pocket maximum is the most that you will be responsible for paying in a given year. In the past you had to pay attention to what was included in the out-of-pocket maximum. The Affordable Care Act has simplified this term by stating that everything will count towards this limit (deductible, coinsurance, and copays).
Why Are These Health Insurance Benefits Important?
It is important to decide on the health insurance benefits in your plan because they directly affect your premium. If you want low deductibles, copays, and out-of-pocket maximums, you will need have to pay a higher premium since you are giving more risk to the insurance company. If you want a lower premium, you will need a plan with higher health insurance benefit provisions.
How Do I Know What My Benefits Are?
Another aspect of the Affordable Care Act was the creation of the Summary of Benefits and Coverage, or SBC. The SBC sets standards on how a health insurance plan should be read. It should be no more than 4 pages front and back and is clear to read and understand.
By looking over a few SBCs, you can find a medical plan that has the best health insurance benefit provisions that fit the needs for you and your family.