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Understanding your health insurance

What is covered by my health insurance policy?

There are many different types of health insurance coverage. The most common plan types include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), High Deductible or Consumer Directed Health Plans (HDHP or CDHP) and Limited Medical policies (sometimes called mini-med).

You will want to understand your benefits coverage before seeking care. Your health benefits will vary depending on what type of plan you have. Some key items to understand include:

  • Does your insurance require you to select doctors and providers from a list? (This is often called a provider network.)
  • If you use a provider outside of the allowed network, will your insurer pay for any portion of the care? (This is often called an "out of network" benefit.)
  • Specifically, what services are not covered by your insurance? (For example, cosmetic surgery is generally not covered. Dental services are not typically part of medical coverage and require separate dental insurance.)
  • Are medications covered by your policy, and if so, what types of medications are covered?
  • Is there a limit on the total amount that your insurer will cover?
  • What portion of your healthcare are you being asked to pay out of pocket? Depending on the type of plan you have, you may be asked to pay:
    • A deductible, which is the total amount you must pay before your insurance begins paying.
    • A co-payment, which is a specific amount you must pay at each visit or for each medication
    • Co-insurance, which is the specific percentage you must pay for each service or each medication up to a limit (the limit is often call the Out of Pocket Maximum)
    • Out-of-Pocket Limit, this is the maximum amount you will pay in a plan year.

For more information about deductibles, co-payments, limits and co-insurance, please see the next sections of Understanding Your Health Insurance.

If you receive your health insurance from your employer, refer to your benefits plan summary or contact your Human Resources representative for details. If you purchase your own insurance, contact your insurer or broker for a summary of benefits.

What is a provider network, and how does it work?

A provider network is a group of providers who agree with an insurance company to accept lower prices for their services. The term "provider" includes healthcare professionals and facilities like doctors, hospitals, retail clinics, pharmacies, optometrists and many others. Health insurers create provider networks in order to get better prices.

If your insurance includes a provider network, it is important to know if your doctor or other provider is in the network ("in-network") since your insurance will pay a higher level of coverage for in-network providers. If you provider is out of the network ("out of network") you may have to pay significantly more for the service.

Use your provider directory or search for in-network providers at your health insurer’s web site.

What is a deductible, and how does it work?

A deductible is a set dollar amount that you must first pay out of pocket each year for covered services before your health insurance policy begins paying its part for services. You can think of a deductible as a pool of money. Once you have spent your pool of money out of your pocket, your insurance begins to pay for services.

It is important to understand and shop for prices before you receive treatment when you are using your deductible. Even if you are paying for services at the in-network rate, the in-network price for the exact same service can be very different depending on which provider you choose. For more information on healthcare prices, please see Using the Healthcare Bluebook to Find a Fair Price.

What are co-payments, co-insurance and the out of pocket maximum; and how do they work?

A co-payment (or co-pay) is a fixed dollar amount you pay for covered services, such as a doctor’s office visit or medication. There are frequently different co-pays for different services – a doctor’s office co-pay is typically lower than an emergency room visit co-pay, or you may have a lower co-pay for generic medications than brand name medications.

Co-insurance is a percentage that you will pay for covered services. For example, if you have 20% co-insurance, then you will be responsible for paying 20% of the in-network cost for services (the insurer will pay the other 80%). If you have a deductible, then co-insurance begins only after you have paid your full deductible amount.

The out of pocket maximum is the most you will pay out of pocket in a benefit year for medical services. The out of pocket maximum is designed to limit the total amount that you have to pay with co-insurance and deductible.

What is a Health Savings Account (HSA) and a Health Reimbursement Account HRA), and how do I use them?

Health Savings Accounts (HSA) and Health Reimbursement Accounts (HRA) are savings accounts that help you save and pay for out of pocket medical expenses. HSAs and HRAs are intended to help you pay for your deductible before insurance benefits kick in. There are a few important differences between the two types of accounts:

  • Health Savings Account (HSA) – HSAs enable you to pay for current health expenses and save for future qualified medical expenses on a tax-free basis. In order to have an HSA you must be covered by a High Deductible Health Plan. Any employer can offer an HSA (or a self-employed individual can set one up on his or her own), and both employers and employees can contribute to it with pre-tax income. One big advantage of HSAs is that you can earn interest on your savings – similar to a 401k retirement plan. HSAs also stay with you when you change jobs.

  • Health Reimbursement Account (HRA) – HRAs are similar to HSAs – they allow you to pay for current health expenses and save for future qualified medical expenses on a tax-free basis. HRAs also earn interest over time, and most employers allow your to rollover unused funds from one year into the next (so that your HRA grows in value over time). However, unlike an HSA, only your employer can make contributions to your HRA (individual contributions by the employee are not allowed) and you cannot take the HRA amounts with you if you leave your employer.

You should use your HSA/HRA to pay for all medical services until the amount of the deductible is reached. Most HSA/HRA accounts have a checkbook or debit/credit card that you can use to pay for services at the provider’s office.

Are there special program or discounts that can help me save money?

If you receive your health insurance through your employer, you may be eligible for discounts on medical procedures, diagnostic tests and medications. Your employer may also offer rewards for active participation in Disease Management, Lifestyle or Wellness programs. Some common types of discounts and rewards include:

  • Prevention: Many employers exempt preventative services from co-pays or your deductible. This means that you receive a discount or may not have to pay out of pocket for these services. Common examples of preventative services include regular pediatric visits for children, colonoscopies, and mammograms for women. Consult your employee benefits guide or contact your Human Resources representative for more information.

  • Treatments for Chronic Conditions: Many employers exempt lab tests, supplies and some medications from the co-pay or deductible for employees who have a chronic condition such as diabetes, asthma or cardiovascular disease. This means that you receive a discount or may not have to pay out of pocket for these services. Common examples of free or discounted services include A1c lab tests, diabetes test strips, and generic cholesterol lowering medications. Consult your employee benefits guide or contact your Human Resources representative for more information.

  • Participation in Disease Management or Wellness Programs: Many employers offer rewards for participating in chronic disease or wellness programs. If you are eligible for the programs and choose to participate you may be able to earn rewards. Common examples of rewards include a lower monthly insurance premium, cash awards contributed to your Health Savings Account (HSA) or free smoking cessation patches when participating in a smoking cessation program. Consult your employee benefits guide or contact your Human Resources representative for more information.

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