A PondLeap Series: Healthcare in the United States
In the last article in this series, we talked about the different places that you can find health insurance in the United States. Once you’ve determined where to obtain health insurance, you’ll have some options as to what type of insurance plan you will select. This can be a confusing selection and we’re here to take you through those next steps. First up, we’re here to break down what the different payment terminology means. As an immigrant or foreigner, navigating the terminology can present the first obstacle. There is not just one type of payment when it comes to health insurance. We are going to break these down step by step to help you understand what you might be responsible for. When you’re presented with a plan it will be important to understand what each of these means to help you make the right decision for your own health and budget.
First up for this series…where can you even get health insurance in the United States? There are a couple of different options when it comes to obtaining health insurance. Where you go can depend on a number of different factors including your age, your employment status, and your financial situation.
Premiums are monthly payments to pay for your insurance. You can think of this similarly to a car payment where you are required to continue making these payments. Depending upon where you receive your insurance, an employer may cover a portion of the monthly premium. In some plans, the higher the premium, the lower the deductible. (See below)
A deductible is a yearly amount that you will have to pay before your health insurance plan starts covering costs. When you go to the doctor, pay for a prescription, or have a procedure, these typically will go towards “meeting your deductible.” Once you have paid your deductible “out-of-pocket” then your insurance will begin to cover costs above and beyond this amount for your visits, medications, and procedures. In some cases, they will cover a portion and you will pay a co-insurance. (See below)
Coinsurance is typically a percentage. This is the amount that you will pay after you have met your deductible. Once your out-of-pocket deductible is met, then your insurance will start paying a portion of the remaining costs. If you have a 20% coinsurance, then once you had paid enough medical expenses to meet your deductible then you will only pay 20% of all future costs. This will continue until you meet your out-of-pocket maximum.
A copay is a flat, predetermined fee that you pay for a specific type of doctor’s visit. A visit to your regular doctor might be one fee and a visit to a specialist might be different, but they are fixed fees, instead of paying the full amount of a visit. These payments also go towards your deductible.
Out-of-Pocket Maximum / Out-of-Pocket Limit
Some plans will have this limit to ensure that your out-of-pocket expenses cannot exceed a certain amount. Once you have paid this limit, your insurance will then cover 100% of the expenses (even if you have coinsurance, you will no longer have to pay this percentage).
These terms will show up in many of the plans when you begin to evaluate your options. It’s important to understand how they all work together. The balance of these payments will affect how much you pay, how stable your payments will be, and what amounts you will have to pay versus your insurance.
In combination with these costs, it’s also important to evaluate your health needs and the expectation around what types of healthcare you may need for the year. The two together will help you to gather the best picture of which plan will be the best for you and your family.
Next up in the series, we’ll go through what different types of plans might be available and how these payments above will be covered in those plans.