18 Helpful Hints For Anyone Who's Ever Been Confused About Health Insurance (2024)

Big thanks to insuranceQuotes.com analyst Michael Giusti for shedding light on the world of health insurance.

Just so you know, this post is intended as a general overview of how health insurance works. Always look at your individual plan, budget, and needs when you're making health-care decisions; after all, you know your health and money best.

If you qualify for it, Medicaid will cover a range of services and treatments. Eligibility varies by state, but in New York for example, if you're single and make $17,775 or less annually, you might be eligible.

If you don't qualify for Medicaid but have a job that offers you health insurance, that might be your best option. "From the consumer’s perspective, employer-based healthcare is much less expensive. That is because for years employers have subsidized healthcare as an incentive to work there. The portion the employer pays is generally invisible to the employee, so the total insurance feels less expensive," said Giusti.

The third option is a healthcare plan that you select from the marketplace on HealthCare.gov or your state's exchange website.

Giusti explained that "The ACA [Affordable Care Act] is in the best shape it has been in in years. Congress has increased subsidies and lowered the thresholds for people to qualify, so more people than ever can get ACA policies for a $0 monthly premium... If someone doesn’t have employer-backed healthcare, checking an ACA marketplace makes so much sense right now."

When you plug your financial information into your state's health insurance marketplace, they'll let you know if you qualify for aid on your health insurance plan.

"Open enrollment" is the period of time when you can enroll in or make changes to your health insurance coverage. Because of the pandemic, enrollment for 2021 is still open through August 15.

In a typical year, Giusti said, "You can either make changes during open enrollment, which is typically toward the end of the year, or if they have a change-in-life event." A change-in-life event could include a change in marital status, a change in employment status, or adding a child to the family.

So if you decide to quit your job and work for yourself, for example, you don't have to wait for open enrollment to come around again to sign up for a new plan.

Start by looking at the different "metal" tiers in your state —platinum, gold, silver, and bronze. Giusti explained that these tiers "refer to the percentage you pay, not to the quality of care. A bronze plan will give you the same care as a platinum plan — they just have different costs." Attached to each plan is a monthly payment, deductible, out-of-pocket maximum, and list of fees you pay for various services (I'll go over all of that in a bit).

"As a rule, if you foresee needing more care in a given year, a higher tier may make more sense, while if you tend to be healthier, the lower tiers make the most sense," said Giusti.

"Lower premiums are for the young and the healthy. If you only plan to go to the doctor once per year for your annual checkup, and you don’t have a ton of prescriptions to fill each month, a lower premium is probably for you," said Giusti.

Just keep in mind that plans with lower premiums usually have higher deductibles —this means that if something does happen to you, like an accident or unexpected serious illness, you'll likely end up paying more out of pocket for your care.

Giusti explained that a plan with a higher premium (monthly payment) might make more sense "if you had a chronic illness that required regular care. Say you had kidney failure or cancer, and you knew you would be in and out of the doctor all year." These plans may be more expensive upfront, but the copays and other costs you pay at point of service tend to be lower than with other plans.

And, keep in mind that the Affordable Care Act made preexisting conditions a moot point — so companies have to provide coverage even if your condition was preexisting.

When something is covered by your policy, it is often called a "covered benefit" — but there might still be a copay or coinsurance rate attached to a covered benefit.

"Copays are set fees you pay whenever you do certain things using your insurance — such as see the doctor, buy a prescription, or go to urgent care," said Giusti. Copays usually apply to routine visits, while he says, "Coinsurance is the percentage of the care you pay for after your deductible is met."

So, you might pay $25 to see your primary care physician (copay). But if you had a procedure done at the hospital, you might pay a set coinsurance percentage once you reach your deductible (more on that later). If your coinsurance is 20%, you'll pay 20% of your healthcare costs, and your health insurance company will pick up the other 80%.

Here's how Giusti defines these key terms:

"Think of it as a floor and a ceiling. The deductible is how much you pay before the insurance kicks in — the floor, but the out-of-pocket limit is the most you have to pay in a year — the ceiling. Once you hit your deductible, the insurance pays a certain percentage for care after that, depending on your policy. ... Once you hit your out-of-pocket maximum, all costs are covered by your insurance (except for your premiums, which you still need to pay)."

So if your annual deductible is $3,000, you'll have to pay $3,000 before your insurance kicks in. Once it does, you'll still pay the set coinsurance until you reach your annual out-of-pocket maximum. Only then is everything covered (except monthly premiums).

Moral of the story? If you anticipate needing a lot of medical care, you might want to look carefully at the out-of-pocket maximum when you're shopping for a plan.

If you're on a plan with your partner or family, everyone will have an individual deductible and out-of-pocket maximum, *and* there will be a deductible and out-of-pocket maximum for the entire family.

It's confusing.

"It works like this: Say you fall off a ladder and break a leg. You would pay your individual deductible and probably even hit your out-of-pocket maximum. But if your spouse is injured later, the spouse would also need to meet a separate individual deductible and out-of-pocket maximum. But at that point, together you both might have hit the family out-of-pocket maximum. If a third member of the family then gets injured, that family member would not have to cover a deductible or maximum, because you two together already hit that threshold for the family," said Giusti.

If you want to see a specific doctor who is not in-network or get treatment not covered by your insurance, you might have to pay the full cost out-of-pocket. Or it might be partially covered. It all depends on your insurance. Either way, it might be helpful to brush up on some handy medical bill negotiation tips.

But, keep in mind, emergency situations are usually covered. Giusti confirms: "Yes, typically your health insurance will cover out of network providers for emergency and urgent care."

Giusti said that emergency and urgent care out of state are usually covered, but that "international coverage really depends on the plan. ... In many cases, you can purchase travel insurance, which will cover any medical emergencies during international trips."

Travel insurance coverage can vary, but it usually covers things like medical emergencies, trip cancellations and interruptions, medical evacuation, and luggage issues. You can buy travel insurance through companies like AIG and Allianz (or others), but you might also check your credit card benefits. Some cards, like the Chase Sapphire Reserve and United Explorer Card, provide some level of coverage, although it's usually travel related (delayed trip, lost luggage, etc.) and not medical.

The last thing you want is to worry about what's covered and what's not during an emergency. "The key is to get the care you need," explained Giusti. "That said, it is helpful to plan out a preferred hospital and/or urgent care clinic in advance. Most insurers have pretty handy apps now too, which makes looking up in-network providers a lot easier, even in an emergency."

So before anything happens, make sure you know where your closest in-network emergency rooms and urgent care offices are located. It's so much easier to figure this stuff out during a calm moment, and if you ever have an emergency, you'll be so glad that you already know where to go.

"With the ACA, preventative care is no cost to the patient. People need to get their screenings every year. They also need to set up a relationship with a primary care physician so they have a go-to provider if they get sick and don’t have to rely on urgent care or the emergency room," said Giusti.

Also, it'll be worth your time to take some time to read through your policy —some insurers offer discounts on gym memberships or will literally give you money for meeting step goals. You're paying for it, so you might as well take advantage of everything your plan offers.

"Some health plans will cover ophthalmologist appointments to gauge your overall eye health, but for routine vision checks and glasses and contacts, that is all covered by a separate vision plan. The same goes for dental cleanings, fillings, and the like," said Giusti.

Dental and vision insurance are typically much cheaper than medical insurance, but if more coverage isn't in your budget, that doesn't mean you have to tape your glasses together and let your teeth rot. You might be able to get discounted services at local clinics or find deals on sites like Groupon that can make this care more affordable.

A few non-traditional healthcare plans exist outside of the ones we've discussed. These include catastrophic plans, short-term health plans, and medical cost sharing programs.

"Catastrophic plans are also known as high deductible health plans. They are only for younger people in generally good health. They have very high deductibles — many thousands of dollars — before coverage kicks in, so they don’t make much sense if you use a lot of healthcare," said Giusti. "There are some other kinds of plans that aren’t regulated by the Affordable Care Act, like short-term health plans, but those really aren’t health insurance. ... I really discourage people from buying one of these instead of healthcare."

Just so you know, short-term health plans are usually used to fill the gaps between coverage —like if you are between jobs or missed open enrollment. They're better than nothing, but they usually don't cover preexisting conditions or some preventative care appointments.

Meanwhile, medical cost sharing programs are typically run by non-profit, charitable organizations that collect low monthly payments (like premiums) from members. When a medical bill comes up, you submit a request for help to pay the bill. There's no guarantee on what will and won't be covered, but the monthly cost is usually lower, and you don't have to worry about staying in-network for care.

"It is still technically required by law for everyone to get insurance, but a few years ago, Congress dropped the penalty for the so-called 'Individual Mandate' to $0," said Giusti.

In short, you won't go to jail if you don't have insurance, but if you get sick or injured, it can really come in handy and save you from paying big medical bills out of pocket.