Seven mysteries of health insurance in the USA, and how to solve them
Whether you're being disenrolled from your parent's health plan or you've been on open enrollment for years, navigating health insurance terminology can be challenging. Edition CNN has collected the biggest health insurance mysteries and told you how to solve them.
Plan coverage information is not always transparent. There's no one right answer, since choosing the best plan depends on your health and needs, says Dr. Renuka Tipirneni, assistant professor of internal medicine at the University of Michigan Medical School.
“It's confusing to me, and I'm in the health insurance business,” Tipirneni says. “But I've been on the receiving end of an unexpected bill myself, so I think it's really important to be informed and understand that we can all make these honest and simple mistakes, and then seek help when that happens.”
Tipirneni says there are consequences to not knowing about health insurance, including the possibility of facing unexpected costs. You may not even seek medical help if you don't know how much you'll have to pay.
Here are some common health insurance mysteries and what you need to know to get the help you need.
1. When can you sign up for insurance?
Why can't you sign up for health insurance at any time?
"Insurance companies don't want people to buy insurance when they get sick," explained John Holahan, a fellow at the Center for Health Policy at the Urban Institute in Washington.
“Open enrollment is designed to protect the insurance company from so-called adverse selection. So that people do not buy insurance at the very moment when they need help, just like buying insurance on a house when it is already on fire,” Holahan said.
Open enrollment periods typically occur in the fall and early winter, Tipirneni said. Typically, you can also enroll if you experience certain life events, such as losing insurance, moving, getting married, having a child, adopting a child, or if your household income falls below a certain level.
If your income is low enough to qualify for Medicaid (U.S. government-sponsored insurance), you can sign up for it at any time.
2. Insurance premiums and claims
Some people confuse the difference between insurance premiums and insurance claims. According to Tipirneni, premiums are the monthly fees you must pay to have health insurance, even if you never use your plan for medical care or medications.
A claim, Tipirneni says, is a bill that a health care provider sends to an insurance company to cover its share of the cost of medical care. Sometimes your healthcare provider will require you to submit your claim to the insurance company yourself.
The deduction may seem like a discount, but it is not. According to Tipirneni, this is the amount you must pay out of pocket for health care before your insurance coverage kicks in.
Deductions usually begin in January. If you have a $1000 deductible for this year, you will have to pay the full cost of any medical care until you reach $1000. One doctor's visit may not cost much, so it may take months to reach your deductible. If you rarely visit doctors, you may not reach this amount until the end of the year.
High-deductible plans are popular because they often come with low monthly premiums. As Tipirneni explained, they may look very attractive because they appear to be the lowest in initial cost, but you may actually end up paying more in the end. For example, if you have a plan with a $3000 deductible, but you don't spend your deductible by the end of the year, you have paid the full cost of all medical services received plus monthly premiums.
“Sometimes you end up with more total health care costs than if you had chosen slightly higher premiums and a lower deductible,” she noted.
Tipirneni says if you're young and healthy and don't have a medical condition or prescription drugs, a plan with a higher deductible may be right for you. If you have one or more medical conditions, frequently visit doctors, or take medications on a regular basis, then it is better to choose a plan with a lower deductible.
There is no universal rule for determining how many expected medications and doctor visits should result in the need to purchase a plan with a lower deductible, especially since healthy people may have unexpected medical needs, such as the result of a car accident or sports injury.
“All you can do is estimate how much health care you will use in the coming year,” Tipirneni said.
Once you've met your deductible, you typically pay a copayment for each doctor visit—a flat amount determined by the type of insurance you purchase. The rest of the bill is usually covered by insurance.
Different services may have different copay amounts because insurance plans cover a different portion of each service, Tipirneni said.
“Out-of-pocket expenses” is, in her words, an umbrella term that refers to everything you pay in addition to the insurance premium: co-payments, deductibles, coinsurance, etc.
As Holahan noted, some policies have maximum amounts that limit the total costs you can incur.
5. What is covered
Tipirneni says knowing what services are covered can be confusing because that information can change every year.
All plans have a list of covered services that is included in the directory or other information provided when you enroll.
Sometimes plans don't cover some of the illnesses or issues you think they'll cover, Holahan said. For example, a plan might cover hearing tests but not hearing aids.
"If you're unsure, call the number on your health insurance card to talk to the plan and ask how much it will cost or if it's covered," Tipirneni advises.
6. What is and is not included in the network
In-network providers have pre-negotiated agreements with your insurance company about how much they can charge for their services, while out-of-network facilities do not.
"If there are doctors and hospitals that are really important to you, it's best to choose a plan that has them in network," says Holahan.
Online provider directories or networks posted by insurance companies can help you find out if your current doctor is in network.
If you are prescribed an important drug, check your plan's drug formulary, which is a list of drugs that are partially or fully covered by your insurance. Tipirneni says the extent to which your plan will cover certain services or drugs may change, so check this information every year.
Insurance plans may cover services from out-of-network providers to some extent, but usually to a much lesser extent than what is covered by in-network providers, she added.
This can be a problem if you need to see a specific specialist or you are away from home. So Tipirneni recommends: If you have time before you travel, check with your insurance company to see if your destination has in-network providers or hospitals so you can pay less for unexpected services.
7. Explanation of benefits
If you received an Explanation of Benefits and don't know what it is, rest easy - it's not a bill. This is simply an overview of which parties are paying for what.
If you receive an unexpected bill—for example, for a procedure involving multiple providers and some you didn't know were out of network—Tipirneni recommends appealing the bill to your insurance company or hospital.
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“Usually, during these conversations, we can agree on a reduction in the amount,” she said. “Some laws have been passed - and I think more will be passed in the near future - aimed at making this happen less often and making it more transparent so that people can make more informed decisions about where to seek medical care.” .
If you need more help, health insurance navigators can help you determine which plan is right for you. Health insurance agents can do the same, but they may have an incentive to offer some plans over others.
When you sign up for federal health insurance, you can talk to staff who can help you find out if you're eligible. The Affordable Care Act website has search functions to find help.
Holahan says that if you enroll in a work-based health plan, your HR person can explain what plans are available or provide you with materials.
“The more you do your research when choosing a plan and when you need medical care, the better informed and prepared you will be to avoid paying more than you should,” Tipirneni concluded.
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