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About 6 minute read
Health Insurance 101
for First-Time Buyers
Buying health insurance for the first time can be daunting. There are so many different plans to choose from and many vocabulary words unique to the subject – it can be challenging to decide what’s best for you and your family. This health insurance 101 guide can help make buying health insurance less intimidating.
What is health insurance?
Why is owning health insurance important?
What are insurance terms you should know?
What are the types of health insurance plans?
How much does health insurance cost?
Is health insurance required by law?
Where can I buy health insurance?
What is health insurance?
Health insurance, also known as medical insurance or healthcare insurance, refers to a contract that requires an insurer to pay a portion or all of an individual’s health care costs in exchange for a premium.[ ] Health insurance typically pays for expenses obtained through medical, surgical and prescription drug needs, reimbursing the policyholder – you – or the insurer for expenses caused by illness or injury.
Why is owning health insurance important?
There are more advantages to owning health insurance than not owning health insurance. Medical expenses often accumulate to hundreds, thousands, or even tens of thousands of dollars if the medical issue is severe enough to require costly procedures and continuous treatment. If you don’t have health insurance and end up needing costly medical care, you can accumulate an overwhelming amount of medical bills. Screening and stabilization offered by a hospital emergency department are the only guaranteed services available to you if you are uninsured.[ ]
Your health is one of the most important, valued aspects of your life. Ensuring that you are able to afford medical care during trivial illnesses, the most serious medical emergencies and everything in between is just as important. Having health insurance will give you peace of mind, knowing you will have an easier time maintaining or recovering your health.
What are health insurance terms you should know?
There are many health insurance terms that may leave first-time buyers confused. Knowing these essential terms will aid you in choosing a policy that best suits your needs.
Coinsurance: The percentage you pay for health care services after you’ve paid your deductible.[ ]
For example: if you’ve paid your deductible and the cost of a prescription is $100, you will only have to pay 25% of that cost, which is $25. The insurance company pays the rest. If you have not met your deductible, you will be required to pay the full amount, $100.
Co-pay: Copay is a shortened form of “copayment.” A copayment is the fixed out-of-pocket amount you pay for health care – again, after you’ve paid your deductible. This fixed rate varies depending on the services within your chosen plan, such as doctor visits, prescriptions, lab tests, and more.[ ]
Deductible: The amount you pay for health care services before your health insurance plan begins to pay for services. If your deductible is $1,000, then you pay for the first $1,000 of health care services yourself.
Out-of-Pocket Costs: The amount you pay for medical care that isn’t reimbursed by insurance. This includes coinsurance, copays and deductibles.[ ]
Premium: This is the monthly payment you make to your health insurance provider.[ ]
What are the types of health insurance plans?
There are many different types of heals insurance plans offered by your state’s Marketplace and insurance brokers – all of which are designed to meet different needs. These health plans are categorized by the amount of coverage they offer: bronze (60%), silver (70%), gold (80%) and platinum (90%).[ ]
In addition to this, each insurance brand may offer certain common types of plans:[ ]
Exclusive Provider Organization (EPO): Services are covered only if you use doctors, specialists or hospitals in the plan’s network except in the case of an emergency.
Health Maintenance Organization (HMO): Restricts coverage to care from doctors who work exclusively with the HMO, either through employment or contract. Like EPOs, there is an exception in the case of an emergency.
Point of Service (POS): If you use doctors and other health care providers that belong to the plan’s network, you will pay less. This plan requires your primary care doctor to send a referral in order for you to seek further treatment from a specialist.
Preferred Provider Organization (PPO): You pay less if you use doctors and other health care providers that are within the plan’s network. This plan does not require you to select a primary care physician nor does it require a referral from a primary care physician in order for you to use health care providers outside of the plan’s network.[ ]
How much does health insurance cost?
The main factors include your premium, deductible, coinsurance, copayment, and maximum out-of-pocket expenses. Other factors may include your age, annual income, the amount of coverage you want, and the number of family members you would like to include.
How much the insurance covers depends on how much the policyholder pays and the policy details explaining specific rules that apply to some plans.
Don’t be afraid to ask your insurance provider about different types of plans that will better suit your financial budget. There’s a health insurance plan for everyone.
Is health insurance required by law?
Essentially, no. As of January 2019, health insurance is no longer required at the federal level. However, some states, including the District of Columbia (Washington D.C.), may have individual mandates that require you to own health insurance coverage in order to avoid tax penalties.[ ]
These states include:
● California
● Massachusetts
● New Jersey
● Rhode Island
● Vermont
The District of Columbia (Washington D.C.) also requires you to have health insurance at the state level or face a tax penalty. As of 2019, the penalty for not owning health insurance is nearly $700 for each uninsured adult and half that amount for each child, reaching a maximum of just over $2,000 or 2.5% of the annual household income – whichever is higher. However, you can file for an exemption in certain cases, such as financial hardship or pregnancy.[ ]
The other five states mentioned above have similar tax penalties. While most states may not require you to own health insurance, it is recommended. You will save money during a catastrophic emergency.
Where can I buy health insurance?
There are various ways to apply for health insurance:
1. You can apply for health insurance through the Health Insurance Marketplace at HealthCare.gov.
2. You can obtain health insurance through your or your partner’s job.
3. You are still eligible for health insurance under your parents’ plan if you are under 26.
4. You can purchase health insurance coverage directly from a health insurance company.
5. Government programs like Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) also offer health insurance coverage.
6. The Veterans Health Administration or TRICARE provides health insurance for military personnel.
7. Your state may also provide a health insurance plan.
8. On a temporary basis, The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to get health insurance coverage from your former employer.
About 6 minute read
How to Read a Summary of Benefits and Coverage
All health insurance companies are required to provide a summary of benefits and coverage (SBC). All SBCs outline the same basic information regarding the details of each plan you’re reviewing, no matter the insurance provider. If you are enrolled in a health plan, it's essential to understand what is in your SBC. This article will explain what a Summary of Benefits and Coverage is and where you can find one. It will also discuss whether or not you should keep an explanation of benefits. Finally, it will provide examples of what a Summary of Benefits and Coverage looks like.
How to Read a Summary of Benefits and Coverage
What is an SBC?
What is the purpose of an SBC?
Where can I find an SBC?
What is included in an SBC?
Should I keep my SBC?
What does an SBC look like?
What is an SBC?
TheSummary of Benefits and Coverage is a document that summarizes the key features of your health plan, such as what services are covered and how much you would pay for those services. This document also includes information about your rights and protections under the law.
The Affordable Care Act requires that every health plan provide an SBC. SBCs are standardized, which means they all have the same format and cover the same topics. This makes it easy to compare plans side-by-side. The Summary of Benefits and Coverage must be written in plain language so that consumers can easily compare health insurance plans.
What is the purpose of an SBC?
The purpose of an SBC is rather simple: it is supposed to help buyers compare the different features of health benefits and coverage. Essentially, an SBC gives buyers an idea of a health plan’s costs, benefits, covered health services, and other unique features like limits and exceptions to coverage.
Reading over an SBC is useful, as it can help buyers understand what’s included in a particular health plan. If you’re exploring different plans, SBCs can help you identify important differences in coverage and understand what features best suit your personal health requirements. It is highly recommended that buyers read through the SBC provided by the insurer. You don’t want to be surprised by any expenses.
Where can I find an SBC?
Buyers will generally receive the SBC when shopping for or enrolling in coverage, at the beginning of each new plan year, and within seven business days of requesting a copy of the SBC from their health insurance provider.
You can also find access to an SBC through HealthCare.gov, which will provide you with documentation for each plan you’re considering. This website also has a Summary of Benefits and Coverage Tool that you can use to compare plans. This Tool allows you to compare health plans side-by-side. The Tool also provides information about what services are covered and how much you would pay for those services.
If you have questions about your SBC, you can contact the health insurance company or your employer. You can also call the Customer Service number on your health plan ID card. If you’re ever in doubt, you can always go through one of these avenues for guidance during any difficulties when trying to understand the Summary of Benefits and Coverage.
When you get health insurance through your job, you may be able to get an SBC from your employer. If you're shopping for a new health plan, insurers must provide an SBC upon request and within seven days of the request.
You can also find an SBC on the Centers for Medicare & Medicaid Services website (CMS). The CMS website provides an online Summary of Benefits and Coverage tool, just like HealthCare.gov.
If you know exactly which health insurance provider you want to work with, you can search for SBC documents through a search engine, though some are more difficult to find than others – depending on the insurance company.
A Uniform Glossary is also available upon request if you have any questions about the words used in health coverage and medical care. Reading through everything health insurance plans offer can be difficult because insurance companies use jargon within their policies and descriptions, such as “deductible” and “copayment.” Knowing what each term means is vital in choosing a health insurance plan that best suits you and your family’s health needs.
What is included in an SBC?
Summary of Benefits and Coverage includes detailed information such as the covered benefits, cost-sharing amounts, and exclusions of the health plans a consumer is browsing.
An SBC must include the following information:
● The name of the health plan and contact information for customer service
● A description of the coverage and costs, including any deductibles, copayments, and coinsurance
● An overview of the covered benefits, such as preventive care, prescriptions, mental health care, and hospitalization
● Exclusions and limitations on coverage
● Information on renewability and continuation of coverage
● Glossary of health insurance terms
Should I keep my SBC?
Whether or not you should keep your SBC will depend on your personal situation. You may need to keep your SBC if you have questions about your coverage or receive a bill for services that you didn't expect.
If you're comfortable with your health plan and don't have any questions, you may not need to keep your SBC. You can always contact your health insurance company or your employer if you have questions in the future.
Summary of Benefits and Coverage (SBC) documents are important because they provide consumers with information about their health coverage. Because of this, it’s recommended that buyers and policyholders keep the most up-to-date SBC in a safe place in your home or office.
What does an SBC look like?
An SBC usually looks like a booklet or a sheet of paper. It will have important information about your health plan, such as what services are covered and how much you would pay. There will also be a section that explains how to use the SBC.
Every SBC also includes frequently asked questions and answers about the insurance plan you may be considering.
The Blue Cross Blue Shield Blue Care Network of Michigan provides access to all of their Summary of Benefits and Coverage PDFs regarding different health insurance plans. If you don’t want to look at this example, here are some links to other insurers:
● UnitedHealthcare
● Kaiser Permanente
● Cigna
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