A Beginner’s Guide to Health Insurance
Last year, I lost my health insurance coverage. Panicked over how to cover the sky-high prices of therapy (and concerned about what would happen if I, let’s say, got hit by a car, I was terrified, confused, angry, stressed, and so much more. I think this gif sums up all the emotions I was feeling:
After my panic subsided and I went to my university for help, I got incredibly lucky. My school offers a health insurance plan specifically for students, as well as full scholarships to cover those that really need it. But the month where the situation was uncertain was terrible, and I realized how important health insurance is, and even more importantly, how incredibly difficult it is to understand.
Getting your own health insurance is one of the biggest steps of adulthood. For such a controversial topic, the process of getting health insurance can be incredibly confusing, overwhelming, and strange. Whether you’re just getting health insurance for the first time, still on your parents’ plan, or just want to be able to understand the debate over healthcare a little better, here are 10 key concepts to understand about how a health care plan works.
Your insurance premium is essentially your monthly bill that, by paying, keeps your insurance active. For anyone whose employer offers coverage, this is sometimes partly or wholly paid by their employer. Often, this is used as a metric for how expensive health insurance is considered, even though a cheap plan may not fully cover everything you need and the amount you pay out of pocket is actually more expensive. An important concept within this is that premiums are fully earned, meaning for some policies, refunds are not guaranteed.
Copays accompany almost every medical expense not completely covered by insurance. They are flat fees, such as when you go to the doctor and have to pay perhaps 20 percent of the bill.
Even with the premium paid, your insurance plan will often have a yearly deductible or an amount you have to pay before the insurance kicks in. The amount of it can vary. The deductible might carry forward to the next year depending on the amount you spend on medical expenditures in one year to the next for certain insurance plans.
Coinsurance kicks in after the deductible is paid and is often an 80/20 split. This is different than a copay though because instead it relates to the actual insurance coverage.
Flexible Spending Account
A Flexible Spending Account is much like a retirement account where you can set untaxed money aside for future use. The amount within this account can be used in case of a medical emergency for out-of-pocket expenses. It is important to keep in mind that using this money may have a waiting period.
Often, the company you’re employed by has a big say in the type of insurance you receive. Self-funded insurance is not funded by you but rather by an employer; therefore, they get profits from the insurance plan. Additionally, because state laws often don’t apply to these laws, they can often rescind benefits if they are too expensive for the company and are not required to cover all “essential” health care costs.
The contrast point to self-funded plans, fully-funded (also known as fully-insured) plans offered via an employer provide the profit to an insurance company and are regulated by state laws to provide for all state-mandated healthcare essentials. Check out this handy guide to the difference between fully-funded plans and self-funded.
An alternative to the traditional employer offered or private market health care plan, this is likely the insurance option you’ve heard controversially discussed in the news. Offered via the government, this option is single payer, and covers all essentials, though, with continued changes in policy, these are hard to parse. Often, that includes emergency services, pregnancy and newborn care, mental health and addiction services, prescriptive drugs, and pediatric oral and vision care. Open enrollment for this insurance comes every year November 1 to January 31st. If your employer does not offer health insurance and you’re not signed up separately, you will have to pay a tax of 325 dollars (or, if higher, two percent of your income).
Preexisting conditions are often hard to understand when signing up for insurance. If you’re already covered by insurance, this likely won’t hinder you, but if you must switch, a preexisting condition is any medical condition that you have prior to obtaining coverage.
An employer-sponsored program, the Health and Wellness benefit program is an addition to insurance meant to help employees maintain or improve their health. These are often one of many supplemental programs available through employers--other available options may include optional dental or vision insurance.
These terms are just the beginning of what you need to understand about health care. If you’re starting to search for a plan, consider three key pieces of information: your monthly premium, the out-of-pocket cost of routine health care (like doctor visits and prescriptions), and the possible out-of-pocket costs for emergency health care. For your specific needs, especially if you’re a women-identifying individual, you should make sure your health care helps you pay for expenses that sometimes might not be covered, such as birth control or gender affirmation surgery.
While this process, can be super overwhelming, hopefully, this starter guide has helped you feel a little less like this:
And a little more like this: