As the new year approaches and open enrollment periods for insurance elections begin soon, it is important to understand all the terms associated with insurance plans and what to look for when making choices for next plan year.
The first thing to know when choosing insurance for next plan year is what a plan summary is. A plan summary (or benefits summary) explains all the benefits of your plan. This document, which is available from your employer, insurance broker, etc., should be examined carefully. Make sure it covers all the benefits that you (or your family) need. Any specific treatments or types of care that you or your family needs should be questioned to see if it is covered under the plan.
The costs of the plan are also important for you to understand. The costs of the plan include the monthly premiums, but so much more. If the plan has a deductible, this is the amount of money you will need to pay for your own care or your family’s care before the plan pays anything. Sometimes there are copays for office visits separate from or in addition to the plan deductibles that need to be paid. Some plans have a coinsurance percentage (anywhere from 10% to 50% sometimes) that you must pay even after you’ve met your deductible. All plans should also have an out-of-pocket maximum limit that you are required to pay for the plan year, which generally includes deductibles, copays, and coinsurance amounts. Once you’ve paid that out-of-pocket maximum for the plan year, the plan pays 100%.
Here’s an example: Jon pays $1000 per month for a single employee plan. His insurance coverage includes a $3000 plan year deductible with a 20% coinsurance after the deductible is met. He has a separate copay for medications of $10 for generic medications, $30 for name-brand medications, and $100 for speciality medications. He also has a $30 copay for primary care, mental health, and walk-in clinics, and a $60 copay for urgent care visits. None of these visits require him to meet his deductible and only require a copay. His plan has a $5000 out-of-pocket maximum per plan year. If Jon goes to an urgent care, he will pay $60 for his copay. The copay would cover his visit with the urgent care provider. If the provider at the urgent care orders labs or x-rays, however, those charges would be applied to his deductible, and he would be responsible for those costs since he has not yet met his deductible. If he had met his deductible, he would still need to pay 20% of the costs of his x-rays and labs. If the urgent care provider prescribed Jon a medication, he would pay a copay at the pharmacy - either $10 for a generic medication or $30 for a name-brand medication. Once he has paid out a total of $5000 for the plan year, including deductible, copays, and co-insurance amounts, his plan would cover 100% of the costs for the remainder of the plan year.
My hope is that you understand the information you need to know before making your choice about insurance for the next plan year and that you are more aware of the terms used by insurance companies so that you can make an informed choice. When in doubt, ask your human resources manager, supervisor, or plan administrator.
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