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Individual insurance and the Affordable Care Act: Part 1

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BCN’s goal with our weekly blog is to provide our partners with information that is important to our clients and employees.  Recently, as you might imagine, we are fielding many questions, comments and concerns regarding individual insurance and health care exchanges under the federal Affordable Care Act, also known as Obamacare.

This week we will begin to explore health insurance for the individual and try to answer the questions we have been receiving.  Please feel free to send comments and questions to us as we venture down this path.

As more and more employees, employers and the general public  is exposed to the world of health insurance, many people are confused by the language of insurance.  A recent poll found only 14 percent of Americans could define and understand the basic terms commonly used to define health plans.  The questions we receive at BCN support these numbers.

Today we will identify and define the most common terminology used for individual as well as group plans:

  1. Deductible:  The amount you owe before your health insurance benefits kick in. For example, if your deductible is $500, your insurance won’t pay for anything until your costs are more than $500.
  2. Co-pay:  A co-payment, or co-pay, is the amount the insured person pays every time he or she receives a health service. For instance, if your co-pay to see a doctor is $25, you pay that amount each time you see him or her. The insurance takes care of the rest.
  3. Co-insurance:  Your part of the costs of a health service that is covered by insurance. It is calculated as a percentage and you pay it in addition to whatever deductible you may owe. For example if your plan allows $100 for a doctor visit and you’ve already met your deductible, your 20 percent co-insurance payment would be $20. The insurance plan picks up the rest of the cost.
  4. Out-of-pocket maximum:  The most you pay during the period of your policy (most policies are in effect for one year) before your insurance plan begins to pay 100 percent of the allowed amount. This total does not include your balance-billed charges, your premium, or health care services that your plan doesn’t cover. (Some plans don’t count payments to out-of-network providers (see No. 8 below), , co-insurance payments, co-payments, other expenses or deductibles toward this amount, so read the plan instructions carefully.)
  5. Premiums:  The fee you pay to be enrolled in your insurance plan.
  6. Claim:  The bill you or your doctor or health care provider submits to your health insurance company.
  7. Allowed amount:  This may also be called an “eligible expense” or “negotiated rate” or “payment allowance.” It is the maximum amount on which payment is based for health care services that are covered by your insurance.
  8. In- and out-of-network:  An in-network provider is a health care office that has contracted with the health insurance company to provide services for people on that insurance plan. An out-of-network provider is someone who does not have such a relationship with the insurance company. Typically, insurance will only cover the cost of services from health care providers who are “in-network.”
  9. Essential health benefits:  This is the set of health care services that must be covered by certain plans starting in 2014. There are 10 categories in which insurance plans must provide services and items: Maternity and newborn care, prescription drugs, rehabilitative services and devices, lab services, ambulatory patient services, emergency services, hospitalization, wellness and preventive services, chronic disease management, and pediatric services that include vision and oral care.  For more about how these 10 categories will be handled, see this article: Essential health benefits.
  10. Preventive care:  Routine health care that includes checkups, patient counseling and screenings to prevent disease, illness and other health complications.

Next week we will begin exploring the options, costs and alternatives to the healthcare exchanges.

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