June 16, 2011

Health Insurance 101

Health insurance can be very confusing when you are researching on your own, whether via the internet or calling carriers direct.  When shopping for California health insurance, you may find it difficult to understand the various moving parts of a particular policy.  This is why we like to repost this Health Insurance Glossary every so often, as it seems like every day we speak to someone who may be just like you, looking for clarification on one topic or another.  While we make no claim that this guide is comprehensive, get to know the following terms and you'll be able to have an intelligent conversation with a broker, if not make an informed decision all by yourself.

Premium - Everyone's least favorite moving part of an insurance policy, the premium is the amount you must pay to the insurance carrier to secure coverage.  As benefits go up, so do premiums.  Generally, as premiums go down, deductibles go up, and vice versa.

Copay - a Copay is the portion of the service that you are responsible for paying.  This is usually a small, flat dollar amount under $100 or so. Most of the time, copays do not apply to the deductible, but often do not require for the deductible to be met in order to use them.  There are of course some exceptions.

Deductible- The amount you must pay before your insurance kicks in.  Many plans have ways around the deductible, usually in the form of a copay.  Services with a copay often do not require you to meet the deductible first.  This is usually for services like doctor’s office visits and generic prescription drugs.

Out Of Pocket Maximum- This term has many names, including Annual Maximum Copay, Annual OOP, stop-loss, OOP MAX, but they all mean the same thing: you pay up to this amount, and the insurance carrier covers 100% after it, for all covered services in-network.  This number is greater than or equal to your deductible.

Negotiated Rate- This figure represents the rate for which the doctor has agreed to work for in order to be a member of the insurance carrier’s network.  These figures vary widely, but are often 30-60 percent less than what you would pay if you had no insurance at all.

Generic Prescription Drugs - these drugs are the less expensive type and are often available immediately without having to pay a deductible, for a small copay.

Brand Name Prescription Drugs - These drugs are more expensive and thus have a higher copay than generic drugs.  Sometimes these drugs are not available until you reach a separate brand name drug deductible, and even then often there is a copay after the deductible.  

Coinsurance - this is the amount you will pay after you reach your deductible, but before you reach your maximum OOP.  In today’s California health insurance plans, this figure varies from 25-50%.  Remember, this figure is taken from the already-lowered negotiated rate.  Alternatively, this can be a flat dollar amount instead of a percentage, usually between $50 and $500 depending upon the services rendered.

PPO- Preferred Provider Organization. This is a network of doctors who have agreed to perform services at a specific rate for an insurance carrier’s members.  With a PPO, you can choose among any of the carrier’s doctors at any time. You can self-refer to specialists.

HMO - Health Maintenance Organization- This is also a network of doctors that has an agreement with the insurance carrier, however with an HMO you choose one doctor who manages all of your care.  You must see this doctor for all issues and be referred out should you need a specialist.

Out-of-Network - Out of Network (OON) charges can be incurred when you use a doctor that is not on the carrier’s pre-approved list.  Even on a PPO, you can go outside of your network which can lead to the insurance carrier covering much less than they would had you used a doctor that is in-network.

Now that you know these basic terms, you can use your new-found knowledge to quote and compare California health insurance plans.  If you're uncomfortable going it alone, visit www.quotebroker.com or give us a call at 800-783-0802 and one of our licensed professionals would be happy to assist you.