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Understanding Your Medicare Health Care Insurance Plan Coverage - What You Need To Know!

Updated on December 12, 2012

With many companies as well as Medicare starting to host annual open enrollment periods, it's important to know what exactly you would be covered for when it comes to the health care coverage you are buying. Now there is no way to cover each and every plan, provider and option, but it is important to know some key terms that will help you decide which coverage is best for you and your family. Many people take for granted that the health care industry is changing. Even though "Obama Care" is changing the industry a great deal, it's still a far leap from universal health care, or full coverage. Regardless of your health care provider you will still be expected to pay for medical services when they are rendered. Sorry folks, there really is no such thing as a free lunch.

Much like buying a car insurance plan, purchasing health care insurance can be a daunting task, but it doesn't have to be! If you are armed with just a little bit of knowledge, you can ultimately fid the right fit. With just a few main pieces of information, you too will be able to make the choice that is right for you and your family. Remember, there are positives and negatives of each plan and setup.

Premiums - What You Pay For Coverage

The first term you need to know is "premium"! Made to sound like you are actually getting something special like a gourmet cup of coffee, or an upgraded hotel suite, it's really just a fancy term for your insurance bill. In a nut shell this is what you pay for the privilege of having health care coverage. In some cases your employer may pay the premium for you, or may only pay a portion of the expense. In my case, my employer actually chips in for some of the expense of my insurance premium, but I still have to add to is. My employer conveniently takes money out of each paycheck to make sure it gets to where it needs to go. Much like buying a care there are tons of different plans to choose from with different options. You can purchase a plan with full coverage and no additional expenses, but it will cost more on a monthly basis. Overall the less liability you have a patient, the more the plan costs. It always cracks me up when I hear people talking about the cut-rate insurance plan they have. Odds are if it was really any good it wouldn't cost less than your daily coffee habit.

Deductibles - Your Gateway To Medical Care

A deductible is usually an amount that a patient must pay before your insurance will pay anything to your health care provider for services. This usually excludes things like doctors office visits and regular day to day stuff, but instead usually refers to inpatient stays, surgeries, and diagnostic testing like X-Rays and CT scans. But I pay monthly for my insurance, why should I pay a deductible? Well, let's face it, if your insurance company can get out of paying the provider they will! If you still have a remaining deductible left on your policy, you must meet that amount before your carrier will pay for anything. Lets take for example a patient that has a $2000 deductible. They just went to see their doctor, and it turns out they need to repair a hernia. The patient has never had any charges applied to their deductible so the hospital or facility will generally request the deductible, often times in advance. The actual true cost of the surgery may be well over $10,000, which is the actual cost of the procedure, but the patient would pay $2,000 to the hospital and the insurance carrier would cover the rest. As a general rule of thumb, the higher the deductible, the cheaper the insurance because the insurance carrier has less of a liability. Deductibles are usually considered "annual" deductibles and may reset as of January 1st, or the anniversary of when you first started your policy.

Co-Payment - Don't Act Surprised

"I have great insurance, I don't owe you a dime!" Says the patient who expects a volley of medical services for free since they found some generic insurance carrier for $19.95 a month. A co payment is essentially what you would owe for medical services on a per case basis. Again, as with a deductible, the higher the copay, the cheaper the insurance is. Lets take for example a visit to the Emergency Department. The copay is the amount that you are expected to pay at time of service before you actually leave the facility (in some cases again in advance for a non emergency situation). This is calculated on a per visit basis. So if you visit a world class emergency facility on Monday, and then return two days later for a follow up, you would owe the copay twice, once for each time you were checked in. Co-pays are usually not calculated into your deductible. So no matter how many times you have gone to the emergency room, you would still owe the deductible for say an outpatient procedure.


Co-Insurance - Helping Your Insurance Company Pay The Bills

Co-insurance, or commonly referred to as "COINS", come in all sorts of varieties and flavors. This concept is sorta like heading out to dinner with your friends. You know what I mean, you go out order a nice meal because your friend just got a big promotion and they are trying to show you that money is no object. You feel bad though, because you ordered 3 bottles of wine to wash down your overprices rack of lamb. In this case you;ll want to chip in some money for the bill. Your buddy is taking care of most of it, but you decide to help out a bit. A coinsurance is the same thing, but instead of wanting to do the right thing, you're contractually obligated to do so.

Lets say you decided it was time to get that awesome gastric bypass surgery you always wanted. Yes I'm going with the food theme here. You insurance carrier might say OK, we'll pay 80% and you pay 20% of the charges for the procedure. Sounds fair right, I mean you are getting a slimmer you, and your insurance company doesn't foot the entire bill. I have seen many plans that range from an 80/20 split (they pay 80%, you pay 20%), and I have seen some as bad as going dutch on a blind date with a 50/50 split. Again, the less money your insurance carrier is obligated to shell out, the cheaper the insurance will be. Do you sense the pattern here?

OOP - Out of Pocket Expenses

Finally a term that might help you out! The OOP or Out of Pocket Expense is usually like a cap on the maximum would would owe out of pocket for the annual term of your insurance. This concept comes in handy if you have been a victim of a majorly traumatic event such as a head injury, or something that requires major surgery and a lengthy hospital stay. Usually expressed in a dollar amount, it's like the exact opposite of a deductible. This is the most you will be expected to pay for your health-care during your insured year. In this case the lower the maximum out of pocket expense, the more costly the insurance will be. Again, because the insurance company can be left holding the bag, (or IV fluid pouch I suppose) for lots of cash in the event of a major catastrophic injury, they want to collect as much as they reasonably can with your premiums.

Well which one do I pick?

It's not ever that simple! You can't just pick a plan that only has co pays, or a deductible, it's usually a combination of all of these key billing features that encompass your overall insurance coverages. They all work together to trap you in some way or another. Just remember, the more you will be responsible for in the event of a health failure, the cheaper the insurance coverage will be. The more you pay monthly, the less you generally have to pay in deductibles, co pays, and co insurances. Here is a real life example of how they can all work together. One particular insurance plan I know of has a $2000 annual deductible, and requires co pays for doctors visits, emergency rooms, and out patient diagnostics. In addition, there are expenses required for "well" visits such as my annual check up. It also includes a 20% coinsurance for inpatient and outpatient services, but has a Maximum out of pocket of $10,000. The co pays that I have don't eat away at the deductible, so if I need to have a major procedure done, I pay a minimum of $2,000 to cover the deductible, but the most I would ever have to pay out would be $10,000 per year in co-insurances. And yes, in this case the deductible is applied to the maximum out of pocket expense.

The bottom line is that there is no one single solution when it comes to picking a health care insurance plan. It all depends on if you are generally a healthy person, as well as if you are planning on having any upcoming procedures. My goal was to educate you on a few key things to look for while you are shopping around. I hope this has helped, but please be aware that I am not a representative of any insurance company, medical professional, or legal expert, so I always encourage you to do your own due diligence.


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