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Do you understand your health plan benefits? Here's what you need to know.

Posted April 13, 2022 by Charles A. Zonfa, MD, FACOG | Chief Medical Office

Catching on to insurance lingo can feel a little bit like learning a new language. Words like “copay, coinsurance and deductible” are common terms, but many wonder what do they mean and how does health insurance work?

Health insurance is your partner in paying for doctors, hospital visits, medications and more if you get sick or have an accident. In addition, health insurance pays for preventive care, such as wellness visits and vaccinations, to reduce your risk of getting sick.

When enrolling in a new health insurance plan, it’s important to understand what these common terms mean as you review available health plan benefits.

SummaCare breaks down the basics of health insurance to help you better manage your benefits. SummaCare can also help you find the answers if you have additional questions.

What are copays, deductibles and coinsurance?

When you visit a doctor or have an experience with the health care system, you and your insurer share the cost, using any combination of these terms.

  • Copay: You may be required to pay a small, flat fee, called a copay, when you check in at a doctor’s office, urgent care or emergency room, or purchase prescription drugs. The fee can be different depending on the type of service you receive. You will pay a copay, short for copayment, until you reach your out-of-pocket maximum.
  • Deductible: A deductible is the amount of cost you are responsible to pay for yourself each year before insurance kicks in to share the cost with you.
  • Coinsurance: Coinsurance is the percentage of the total cost you will pay for some health services after your deductible is met. For example, you may pay 20 percent of the bill and your insurer will pay the other 80 percent until you’ve reached your out-of-pocket maximum for the year.

What is out-of-pocket maximum?

This number is the most you will have to pay for your health care for the year. Once you reach your health plan’s out-of-pocket maximum, your insurer will pay 100 percent of your covered medical expenses until the end of the year.

What is a premium?

A premium is the amount you pay monthly to your insurer for health insurance coverage. You will pay the same amount every month, whether you receive care or not. You may be billed this premium, or if you receive health insurance through your employer, it may automatically be deducted from your paycheck each month.

What does in-network vs. out-of-network mean?

In general, your insurer negotiates a lower rate from your doctor. To do this, your doctor joins your insurer’s network of health care providers and agrees upon a set price for services. This is called in-network.

If you visit a doctor that is out-of-network, meaning that provider is not a partner with your insurer, you may have to pay part or all of the bill yourself.

What is prior authorization?

Some health plans require permission in advance of a patient receiving a particular service in order for your insurer to share the cost with you. This is called prior authorization.

Who can help me better understand my plan?

A good place to start is your policy handbook, which includes all of your covered benefits and other pertinent details about your health plan. In addition, an insurance agent through your insurer can answer your questions. If you have insurance through an employer, your Human Resources department may be able to help you.

What do I need to know before enrolling in a new health plan?

There are three important items to consider before enrolling in a new health plan.

First, be sure you read and understand the cost-sharing responsibilities. Health plans differ based on how you and your plan will share the costs.

Secondly, know your total costs for health care. This should include your monthly premium, out-of-pocket costs, including the deductible, coinsurance and out-of-pocket maximum.

Lastly, know the plan’s network types. Some plan types allow you to use almost any doctor or facility, while others limit your choices or charge you more to use out-of-network providers.

Not all health insurance plans are the same and navigating them can be difficult. SummaCare is here to help you through it. Contact one of our Customer Service representatives for questions about your coverage.