What is Health Insurance? Health Insurance Explained! (Easy)

Millions of us now have health insurance under the Affordable Care Act, or what some people call Obamacare. But like many things in life, your health insurance can often be confusing and complicated. Whether youve been insured for years or youre new to the game, understanding your policyis important to your health. . . and your wallet. First things first, you have to pay your premium every month or your insurance could get cancelled- kind of like your cable subscription.

You can also think of it like a shared health care piggy bank -- we all chip in each month,even if were healthy, so the money is there when we need it. If you get insurance at work, your employer probably pays most of your premium and therest comes out of your paycheck automatically. If you have Medicaid, you most likely dont have to pay any premium at all -- the federalgovernment and your state take care of that.

What is Health Insurance? Health Insurance Explained!

If youre insured through a new health insurance marketplace, depending on your income, youmay be eligible for a tax credit that pays a portion of your premium. Once you have that shiny new insurance card, youll want to try really hard to keep itin your wallet! To better your odds at staying healthy, be sure to take advantage of the free preventiveservices that all new insurance plans provide. But of course. . . stuff happens.

 And thats when insurance really comes in handy. Now, having insurance helps a lot, but it doesnt mean all your health care is goingto be free. There are lots of details about your insurance plan that affect how much you pay when youget sick or injured. If you have Medicaid, a lot of these services could very well be free.
What is Health Insurance - Health Insurance Explained
What is Health Insurance - Health Insurance Explained

Otherwise, youll likely have to pay something when you go to the doctor or fill a prescription. This is called a copay when its a specific dollar amount -- like $25 per visit. . . or coinsuranceif its a percentage of the bill. Theres also the deductible -- thats how much comes out of your own pocket before yourinsurance starts paying. Depending on your plan, you might have a deductible for all your care, or it might only applyto some types of care, like hospital stays and prescriptions. So read your plan material, because it can run into the thousands of dollars! Another important part of your plan is the out of pocket maximum.

This is the most you'll ever have to pay in any one year. At least for the benefits your plan covers. Your insurer will pay 100% of anything beyond the maximum for the rest of the year. It can be just as confusing dealing with prescriptions! Your plan has a list of drugs it will payfor, called a formulary, but the prices vary. Check with your doctor or pharmacist, because a generic drug might fix you up the same asa brand name drug, but the price difference could be huge.

What is Health Insurance? Health Insurance Explained!

So, those are the costs typically involved, but remember that theyll be affected by yourinsurance plans provider network. This is a list of doctors and hospitals that are connected to your plan. Insurance companies negotiate discounts with these providers. Stay in-network, and the discounts get passed to you. Go out of network, and you could end up paying full price. And remember that out-of-pocket limit? It wont work if you go out of network!

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In some plans -- like HMOs or EPOs -- your insurance would pay nothing if you go out-of-network. In other plans -- like PPOs -- your insurance will cover you no matter where you go, butyoull pay a lot more if you go out of network. Also, if you want to visit a specialist - like an orthopedist - some plans require a referral from your primary care doctor.

Sound easy enough? Well, sometimes staying in-network can be tricky! In a hospital, its possible that your surgeon could be in-network, while your anesthesiologistis not.

Dont be afraid to negotiate with your provider or file an appeal with your insurer. So as you can see, theres a lot to think about when you choose an insurance plan eachyear. Some plans may have low premiums, but fewer doctors or hospitals and high deductibles.

There are tradeoffs, and understanding and choosing among plans isnt always easy. Remember, if you have questions call your health plan and ask, or check with your hospitalor doctor. If you still have questions, your state insurance department or Consumer Assistance Programcan help.

With the Affordable Care Act, theres new support for consumers, so take advantage ofit! Having health insurance protection is a good thing, especially when you know how it works.

We hope youre now better prepared for the next time you have to pull that health insurancecard out of your wallet. Stay safe, America!