Health Insurance 101: Have Questions? We Have Answers.

Posted June 06, 2024 by H. Kelley Riley M.D., MBA, Chief Medical Officer

Collage of healthcare workers

We get it. Health insurance can be very confusing. There are many moving parts, lots of terms (and acronyms) to understand, different plans and coverage can work a little bit differently and there are many ways to get it.

Nevertheless, health insurance is vital to help you pay for your healthcare costs. Just like car and home insurance, it provides crucial financial protection if you need care, are involved in a severe accident or become seriously ill. If you end up needing unexpected medical costs and don’t have coverage, you could face overwhelming debt and long-term financial hardship, even bankruptcy.

Here's how it works. You pay monthly premiums to your health insurance company and in return (depending on your coverage), they pay for a portion or all of the hospital care, physician services, medication and medical equipment you receive.

Even if you’re not sick or injured, health insurance can help keep your medical costs down. Health insurance can offset costs for routine check-ups, immunizations, cancer screenings and other preventative services.

SummaCare wants to help you understand the basics and how health insurance coverage works, so you can find a plan that works best for you and your family. While you don’t need to be an expert — that’s our job — health insurance is something you’ll handle for many years to come, especially as you age.

Types of health insurance

First off, there are many different types of health insurance and ways to get it, including:

Employer group plans

Employer group plans or group coverage are offered by employers. The most common way people get health insurance prior to retirement is through an employer. Employer-sponsored plans usually offer more comprehensive coverage at more affordable prices than individual health plans because group health insurance allows you to split the monthly premium with your employer.

Individual and Family plans

For those individuals that don’t qualify for Medicare or have group coverage, you can enroll in an individual and family plan to cover you, your spouse and children. Available to everyone, you can find these plans through the Affordable Care Act’s health insurance marketplace/exchange or directly from health insurance companies, such as SummaCare.

Medicare Advantage plans

For those who are eligible for Medicare, Medicare Advantage plans offer more coverage and lower out-of-pocket costs than original Medicare. Medicare Advantage plans offer everything that original Medicare covers, but adds extra benefits and services. Those extras could include coverage for dental, vision, hearing aids, over-the-counter items, gym memberships, rides to your doctor and much more.

COBRA (Consolidated Omnibus Budget Reconciliation Act)

COBRA is a temporary health insurance option that allows an individual to continue a former employer’s coverage after a job loss, divorce or death of a spouse. Unfortunately, COBRA can get very expensive because your past employer doesn’t have to contribute to premium costs, making the entire amount your responsibility.

Types of health insurance plans

Health insurance plan coverage typically lasts for one year and includes a wide range of covered healthcare services, including emergency and non-emergency services.

There are many types of health insurance plans. When deciding which is right for you, consider your healthcare needs, including the frequency of doctor visits and any ongoing treatments, and check to see if your preferred providers and facilities are in network.

Some of the most common health plans include:

Preferred Provider Organization (PPO): These plans are the most common in employer-sponsored health insurance and typically provide broader access to services with both in-network and out-of-network benefits. Although, members usually pay less for in-network services.
Health Maintenance Organization (HMO): These plans typically have lower premiums than PPOs, but the network of physicians and hospitals can be more restricted. Typically, they only cover in-network services and may require plan members to obtain a referral from their PCP to access specialists.
Health Maintenance Point of Service (HMO-POS): This is a type of Medicare Advantage plan that allows plan members to seek care from any Medicare-approved provider. Typically, members can use out-of-network services, but usually at a higher cost.

Provider Networks

Prior to choosing a health insurance plan, it’s important to check the plan’s network of healthcare providers, hospitals and clinics. For example, if you have a chronic disease and see a certain specialist, you’ll want to make sure that provider is in network to avoid higher out-of-pocket costs.

In-network: Providers, hospitals and pharmacies that have a contract with the plan to provide healthcare drugs and services at a discounted rate to plan members.
Out-of-network: Providers, hospitals and pharmacies that don’t have a contract with a plan to provide healthcare drugs and services. Plan members typically pay more for out-of-network services and could be responsible for the full amount, in most non-emergency situations, if a plan doesn’t cover out-of-network services.

You can contact your health insurance company to find out which providers are in-network. Health plans usually have online provider directories that tell patients whether their doctor or hospital is in network.

Out-of-Pocket costs

You’ll pay many types of costs for health insurance. Prior to purchasing health insurance, it’s important to understand your out-of-pocket costs for each plan, which is included in your Explanation of Benefits.

You’ll want to evaluate the plan’s premiums, deductibles, copayments and out-of-pocket maximums. Balancing the monthly premium against potential out-of-pocket costs is important to ensure affordability.

Here's what these key terms mean:

Premium: How much you will pay for plan coverage each month, regardless of how many services you use.
Deductible: The amount of money you will pay out-of-pocket each year before your insurance coverage kicks in. For example, if your deductible is $1,000, your plan won’t pay anything until you have paid $1,000 for covered healthcare services. Typically, lower deductibles mean higher premiums and vice-versa.
Copay: The fixed dollar amount you pay to your provider for a covered healthcare service at each visit, after you’ve paid your deductible.
Coinsurance: This is your percentage share of the costs of a covered healthcare service after you reach your deductible. You’ll pay coinsurance until you reach your plan’s out-of-pocket maximum.
Out-of-pocket maximum: This is the most you could pay during a coverage period (usually one year) for your share of the costs of covered services. After you meet this limit, the plan will usually pay 100% of the allowed amount. However, this doesn’t include premiums.

When to buy health insurance

Unless you have special circumstances, such as getting married or losing coverage, you’ll have to wait to buy or change your health insurance during what’s called the Open Enrollment Period. These annual periods can vary by state and depend on the type of insurance you need.

Medicare’s annual enrollment period runs from Oct. 15 through Dec. 7; a more limited open enrollment period is available from Jan. 1 to March 31.

Open enrollment for individual and family plans runs from Nov. 1 to Dec. 15 in most states. If you’re getting insurance through an employer-sponsored plan, business’ open enrollment periods can vary.

Choosing the right health insurance involves many key considerations, such as cost, healthcare needs and prescription coverage. Making an informed decision involves weighing all these factors against your budget and health priorities to find a plan that offers the best value and coverage for you and your family’s specific needs and circumstances.

For more information on health insurance and benefits, contact a SummaCare Licensed Insurance Representative by calling 888.291.3790 Monday – Friday, 8:30 a.m. to 5 p.m.