How to Avoid The Number One Cause of Bankruptcy - Part 2

This is part two of our two-part series on the basics of health insurance. You can read part one here.

Now that you've got a handle on how to get started finding the right health insurance, you'll want to familiarize yourself some of the terms you'll come across.

These are the different plans:

HMO - Health Maintenance Organization. With this plan, you must stay in the network to receive coverage outside of emergency services. Procedures and specialists will require a referral. You'll have lower out-of-pocket costs, and your primary doctor will coordinate your care for you using the network, including tests and referrals.

PPO - Preferred Provider Organization. This is a great option if you want more provider options. You don't have to stay in-network. However, in-network care is less expensive. You don't need a referral to get a procedure or see a specialist.

EPO - Exclusive Provider Organization. This is the best plan if you want lower out-of-pocket costs no requirement for referrals. You must stay in-network to receive coverage outside of emergency services.

POS: Point of Service Plan
This is another great choice if you want more provider options. Your primary doctor will coordinate your care for you. You don't t have to stay in-network, but it is less expensive. Procedures and specialists will require a referral.

I'm sure you've heard things like copay and deductible when it comes to your health insurance. These are terms that are important to understand when it comes to choosing the plan that fits your lifestyle. 

Premium. A premium is your monthly bill you pay to the healthcare provider. You are paying a monthly bill to access a healthcare plan. NOTE: A lower premium will save you money on a monthly basis. However, it will likely cost you more money out-of-pocket when using healthcare services.

Deductible. A deductible is how much you have to pay to a healthcare provider before your insurance kicks in. In most cases and plans, your insurance company will still split the costs with you using copayments and coinsurance. NOTE: Plans with lower premiums will likely have higher deductibles.

Copayments. "Copays" are one-way insurers split costs with you. A copay is a fixed amount that you pay for specific services. For instance, an insurance plan may have a $35 copay for a doctor's visit. Or a copay for generic prescription drugs. If your health insurance has copays, you will pay this copay until you hit your out-of-pocket limit.

Coinsurance. This is another way insurers split costs with you. Coinsurance isn’t a fixed cost like it is in a copayment. Coinsurance is a percentage of the cost that you will pay for covered health care services. For example, if you have coinsurance of 30%, you will be responsible for 30% of the bill, and the insurer will be responsible for 70% until you hit your out-of-pocket limit.

Out-of-Pocket Limit. This is the maximum you will pay for healthcare services. Payments towards your deductible, copays, and coinsurance all count towards the out-of-pocket limit. Premiums aren’t included.

Are you still with me? Good, I know this can be a little mind-numbing, but having a good understanding of the basics will help you make a good decision.

When shopping for insurance using the marketplace, they will display the plans using tiers or levels from which you can choose. They usually fall under bronze, gold, silver, and platinum. The colors are not an indication of the quality of service. They are an indicator of the estimated costs the plan will cover and how much you will be responsible for. 

• Bronze – 40% consumer / 60% insurer
• Silver – 30% consumer / 70% insurer
• Gold – 20% consumer / 80% insurer
• Platinum – 10% consumer / 90% insurer

Make sure when looking at each tier that you read the summary of benefits carefully. Ask yourself these questions:

• What kind of plan is it? HMO, PPO, etc.? We mentioned these above.
• Are my doctors covered?
• What procedures, office visits, tests, etc. are covered?
• Are my prescriptions covered?

Another option you may come across are catastrophic plans. This type usually has a very high deductible, and you would need to be 30 or younger to qualify. If you are young, don't go to the doctor much, and feeling bulletproof, this may be an option. 

All health insurance plans are required to cover the 10 Essential Benefits according to the ACA. These will also be listed in the summary of benefits for each plan:

1. Ambulatory patience services. These are services you receive without being admitted to a hospital.
2. Emergency Room services.
3. Treatment in a hospital for inpatient care.
4. Pregnancy—pre- and post-natal care.
5. Mental health and substance abuse disorders.
6. Prescription drugs.
7. Physical and occupational therapy.
8. Lab tests.
9. Preventive services, counseling, screenings, vaccines, and care for managing a chronic illness.
10. Pediatric services.

All of this information and more can be found at healthcare.gov. You will also find answers to any other questions you may have and a number you can call for 24/7 help (excluding holidays). Open enrollment ends on December 15th, so act now.