Although many families may have had their Marketplace health insurance coverage for a year, many parents are confused about what language like co-pays, coinsurance, and deductibles mean. Also, families should know what to look for before they pay a bill to make sure the information is correct. All families should know that the insurance “jargon” means, and how it affects them, especially since medical debt is the leading cause of bankruptcy (source: Families USA).
There are many different financial terms related to insurance which affect how much it will cost families.
The amount paid to the health insurance plan for coverage -- usually paid monthly. Note: Families may also be eligible for free or low-cost coverage if eligible for Medicaid/CHIP (Children’s Health Insurance Program.) Individuals under age 30 may also be eligible for “catastrophic” plans that have fewer benefits at a reduced cost (lower premiums).
Premium tax credit
Helps pay for premiums for eligible families. See https://www.healthcare.gov/lower-costs/save-on-monthly-premiums/.
The amount families have to pay before the insurance will start paying. Usually there is a deductible each year. Sometimes it covers the whole family; sometimes each person has a separate deductible.
A fixed amount paid by a patient per health service, such as a $20 copay for one doctor visit. Sometimes the payment is higher for specialists or out-of-network providers.
The percentage paid by families for a health service, such as 20% of the doctor’s bill. The coinsurance is usually higher for out-of-network providers. Note: Plans must cover a portion of 10 Essential Health Benefits, and there is no deductible, copay or coinsurance for preventive services (such as well-child visits and immunizations), as these are supposed to be free if provided by an in-network provider. (See http://www.hhs.gov/healthcare/facts/factsheets/2010/07/preventive-services-list.html.)
The total of the deductible, copays, and coinsurance that a person pays. The ACA sets out-of-pocket maximums. Once the maximum has been reached, the insurance plan must pay all costs. See https://www.healthcare.gov/choose-a-plan/out-of-pocket-costs/.
Out-of-Pocket Maximum (Limit)
The most families pay before the insurance pays 100% for a covered service. Note: Lifetime and annual limits on the amount the insurer will pay have been eliminated by the Affordable Care Act.
The ACA allows people with “Silver” level plans purchased on a health insurance exchange to get help paying their out-of-pocket costs if they are below 250% of the Federal Poverty Level. See https://www.healthcare.gov/lower-costs/save-on-out-of-pocket-costs/.
Allowed Amount or Allowable Charge
The maximum that the insurance will pay for a given service, which is the amount that the insurance company will use to calculate its percentage of the charges. For example, the doctor may charge $120 for a visit, but if the insurance company allows only $100 for the visit and pays 80% of the allowed amount, the amount paid by the insurance company would be $80 (80% of $100) instead of $96 (80% of $120).
The difference between the provider’s charge and the allowed amount that families pay if they don’t use a “preferred” (in-network) provider. This could add up to more than the stated coinsurance amount. (See above, “Allowed Amount.”)
Explanation of Benefits (EOB)
The document sent by the insurance company to the insured showing how much it paid for a health service.
Did you know that up to 80% of medical bills are wrong (source: Consumer Reports)? Once families understand the insurance language, they can examine their medical bills for accuracy. Some tips are:
Families need to be able to understand the language of health insurance to successfully navigate the system. In addition, they can use this knowledge to look at the insurance itself (premiums, copays, tax credits, etc.) as well as verifying that medical bills are correct. In this way, parents can reduce costs and protect their family financially.
Open Enrollment: Healthcare.gov: https://www.healthcare.gov/
Lauren Agoratus is the parent of a child with multiple disabilities who serves as the NJ Coordinator for Family Voices. She also serves as the southern coordinator in her state’s Family-to-Family Health Information Center.