If you have ever reviewed your health insurance plan benefits, you've probably seen terms like copay, coinsurance, deductible, out-of-pocket maximum, in-network, out-of-network, inpatient and outpatient among others. Interpreting all of this information can be difficult, but knowledge of these components is important as the benefits or your particular plan will affect your monthly premium as well as your out-of-pocket expenses.
In addition to forbidding insurers from denying coverage based on pre-existing conditions, the Affordable Care Act also no longer allows insurers to set lifetime benefit maximums, which means that insurers cannot cap the maximum amount they will spend on you in your lifetime. Since this is no longer a concern, we have not included lifetime benefit maximum in our definitions above. The law also requires insurers to cover many preventive services at no out-of-pocket cost to the patient.
When you obtain health insurance, whether it be through an employer, a broker, or purchased individually, at some point you should be presented with a summary of benefits and coverage (SBC) that defines exactly what the plan covers. The insurers themselves normally send out detailed schedules of benefits to their insured members once coverage has been purchased, but these details should be presented to you during the buying process as well.
Below is an example of a condensed summary of benefits that includes information you might receive from a broker or in the health insurance marketplace/exchange when purchasing health insurance.
|Carrier||Health Insurance Company 1|
|Maximum Lifetime Benefit||No Lifetime Maximum||No Lifetime Maximum||No Lifetime Maximum|
|Out of Pocket Maximum (single/family)||$5000/$12,000||$5500/$11,000||$4900/$11,400|
|Lab / X-ray||$0/$60||$30/$60||$0/Deductible then 30%|
|Emergency Room||Deductible then 30%||$250||$250|
|Inpatient||Deductible then 30%||$250, Deductible then 20%||Deductible then 30%|
|Outpatient||Deductible then 30%||Deductible then 20%||Deductible then 30%|
|Pharmacy||$15/$40/$60/30%||$10/$35/$70/$250||$10/$40/20%/50% ($100 Ded. Tiers 2-4)|
As you can see, this example summarizes each plan option by plan type, monthly premium, and other relevant benefit components defined above. In addition to this basic overview, the insurer's full schedule of benefits should also include coverage for services such as preventive care, urgent care, maternity, ambulance, mental health, home health, skilled-nursing facility, and hospice care to name a few. If a certain type of coverage is important to you given your personal health situation, make sure you ask about those benefits prior to purchasing a health plan.
There is some good information that we can take from the summary of benefits example presented above. In this example, which is based on an actual quote, the EPO plan has the least expensive premium followed by the HMO then the PPO. This seems to make sense as it goes in order of most network restrictive to least network restrictive as we learned in the health insurance plans area. Interestingly, the cheapest premium plan (the EPO) also has the lowest deductible ($1500/$4500). The out-of-pocket maximums are similar, although the HMO is the most affordable. Notice how much more affordable office visit copays are across the board as opposed to emergency room and inpatient copays or deductibles plus coinsurance. This is an important point as it ties in with cost information that we present in the Healthcare Providers, Medical Billing, and Patient Choices sections. Notice that the pharmacy (prescription drug) benefits are presented utilizing a four tier system. When pharmacy benefits are shown this way, the copays, coinsurance, or deductibles move left to right from tier 1 to tier 4 and usually from lowest to highest cost also. Generally, tier 1 represents generic drugs, tier 2 is preferred brand-name drugs, tier 3 is non-preferred brand-name drugs, and tier 4 is specialty drugs. In the choosing the right plan for you section we discuss how one can assess his or her personal circumstances and use that assessment in addition to a plan's benefits to make an informed decision on which coverage to purchase. The three plan examples here are very similar in terms of benefits and cost and present us with a simple example to begin with. If benefits are this similar, the decision may come down to whether or not the patient's preferred providers are in-network with each plan. If premium cost is the most important consideration, then the EPO plan may be the way to go.
For new content and further discussion, please visit Healthcare Whiz Explore