Enrollment for health insurance under the Affordable Care Act is underway. If you’ve ever shopped for insurance, or had insurance, you know this involves lots of technical terms that might be confusing.
At a legislative hearing earlier this year, Katrina Daniel, an associate commissioner with the Texas Department of Insurance, said a big barrier that keeps people from getting coverage can be summed up in three words: health insurance literacy.
"Not understanding deductibles, co-payments, that you pay your premium every month even if you don’t use the service," Daniel said.
So let's make some sense of these terms.
We'll start first with the difference between HMO and PPO.
"An HMO will require the patient to pick a primary physician," says Nora Cadena, who usually helps people with their questions at the Highland Mall location of Insure Central Texas. "That physician becomes your health home and any services that the patient wants will have to be approved by that patient’s physician."
With a PPO, the patient doesn’t need a referral from a primary care physician. If you use services in your insurers’ “network” you pay less. That’s because the insurance company has negotiated contracts with clinics, hospitals and doctors in the network to keep costs down.
Next up: what’s a co-pay?
"It’s a set amount that you pay when you go to a doctor or a clinic and receive a service," Cadena says.
Okay, now on to deductibles.
A deductible is the amount you have to pay out of pocket before insurance will kick in. Deductibles vary by plan. They can be anything from $750 to $5,000 for instance. Let’s say a young, healthy person needs insurance.
"You don’t see a doctor on a regular basis but you want to be insured in case you have a serious health condition or you have an accident," says Dr. Esteban López, the regional president for Blue Cross and Blue Shield of Texas. "So you may opt for a high deductible plan because you’re healthy, you’re not going to see the doctor on a regular basis. Well, that means your monthly premium will likely be lower."
Plans on the marketplace are labeled by medals. Bronze plans might require the insurance company to pay 60 percent and the insured pays 40. Silver are 70-30 and gold are 80-20.
"That remainder, that 20 percent or 30 percent that you have to pay, that is called co-insurance," Cadena says.
Under the Affordable Care Act, an insurance company sets a limit on how much the customer will pay total in a calendar year for medical expenses. That’s the out-of-pocket maximum.
"After that, [the insurance company is] going to pay 100 percent," Cadena adds. You continue to pay co-pays even if you’ve met the out-of-pocket maximum, however.
Remember, if you’re enrolled in a 2014 plan, coverage ends Dec. 31. You have to sign up by Dec. 15 to start coverage on Jan. 1, and the signup period ends Feb. 15.
