Whether you have an Affordable Care Act (ACA) plan, employer coverage or Medicare, all health insurance plans have similar components and features. The coverage you may have will depend on several factors, such as if you or your spouse are working, retired, or Medicare age. Once you turn 65, you will be eligible for Medicare. However, some people can qualify earlier due to specific disabilities.
Health insurance is there to help you with hospital and medical costs. Most plans offer preventive visits at no cost, but all other services will have a cost-sharing that you are responsible for paying. Your cost-sharing will all depend on the type of health insurance plan you have. It can be challenging to keep up with the insurance terminology and the difference between certain features. Continue reading for five things you should know when it comes to health insurance.
Your health insurance plan is not free. Generally, an employer plan’s premium is deducted from your paycheck, and your employer helps pay for your insurance plan. On the other hand, ACA plans can offer subsidies depending on income. Whether you have employer coverage or an ACA plan, Medicare premiums can be quite a change once you enroll. The monthly Medicare premiums will be more cost-effective for some people than their previous insurance, while it may not be as cost-effective for others.
Once you reach Medicare age, you qualify for Medicare Part A and Part B, but you have the choice to enroll in a Medigap plan or Medicare Advantage plan to help with costs. Any additional plan you enroll in will have a monthly premium that you must pay to keep your plan. Failure to pay the monthly premium will result in a lapse in coverage.
Deductible versus maximum out-of-pocket
The deductible and maximum out-of-pocket are two different features. The deductible amount needs to be met first before the plan kicks in and helps with costs. The maximum out-of-pocket amount is the limit on your out-of-pocket expenses. Once you reach your plan’s maximum out-of-pocket, your plan will cover your costs for the remainder of the year.
For example, Medicare Advantage plans can have medical deductibles and maximum out-of-pocket limits. Both amounts will vary with each plan. In 2021, the maximum out-of-pocket limit can be as high as $7,550. Once you reach your plan’s limit, you should not have any out-of-pocket expenses for approved services. You will want to be aware that prescription costs do not go toward this amount.
Copays versus coinsurance
Other features that are part of health insurance are copays and coinsurance. Many health insurance enrollees are not aware of the difference between the two. However, Medicare Advantage plans are a great example of health insurance plans that have both.
Copays are a set dollar amount that the plan and provider determine. For example, a specialist visit with your Advantage plan may have a set copay of $40 per visit.
Coinsurance, on the other hand, is a percentage of the cost, so this can vary. A typical example of this on an Advantage plan is with chemotherapy. Chemotherapy may have 20% coinsurance, which means you will pay 20% of that cost at that facility. If you go to another facility, then it could be a different amount.
Most ACA, employer, and Medicare Advantage plans are either an HMO or a PPO. HMO plans tend to have a smaller network and do not provide coverage when outside your service area unless it is a life or limb emergency. PPO plans have a more comprehensive range and can allow you to see providers outside your network if they choose to bill your plan, but you will pay more for out-of-network providers.
However, Original Medicare and Medigap plans, such as a Plan G, do not have a network of doctors. As long as you see a provider that accepts Original Medicare, you will have coverage.
Many health insurance enrollees don’t realize that prescriptions are categorized into tiers with their drug coverage. When it comes to Medicare Part D plans and Medicare Advantage plans that offer prescription coverage, each drug covered by your plan is put into a tier. Generally, the lower tiers are low-cost generic medications. In contrast, the higher tier medications can be costly and are likely to be brand name drugs. Your cost-sharing for the drug will vary depending on the tier.
There are several components within health insurance plans that are important to know and understand. Although there are similarities, the premium, cost-sharing, and networks will vary with each plan. You always want to research the plan you are interested in to make sure you are fully aware of the details.