Requirement to Offer Healthcare Insurance Under the Affordable Care Act

Understanding Your Healthcare Insurance Benefits

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Healthcare insurance is a confusing topic to understand. When you're looking over different plans and what they have to offer, it might be hard to choose the one that works best for your situation. By learning the definitions of key terms used in the health insurance industry, you can get a clearer picture of your benefits and compare healthcare plans.

HMO vs. PPO

There are two main types of medical healthcare insurance plans: health maintenance organizations (HMO) and preferred provider organizations (PPO). With an HMO, you have access to a network of doctors who have agreed to lower their rates for certain services. You must see a doctor within the network and you need a referral from your primary care physician to see a specialist.

With a PPO, you also have access to a network of doctors, but your care is still covered — to a lesser extent — if you visit a doctor outside the network. You do not need to consult your primary care physician before visiting a specialist. In general, you have greater flexibility with a PPO, but the premiums and deductibles tend to be higher, too.

In-Network vs. Out-of-Network

The network is the group of doctors, hospitals and suppliers contracted by your insurance company to provide services to patients. It's important to pay attention to which doctors are in the network and which ones are not. Some insurance plans don't cover out-of-network providers at all, thus increasing the cost you have to pay out of pocket for medical expenses.

Co-Pays

The co-pay is your share of the cost for a medical service. The insurance company covers the rest. For example, you may pay $25 for a sick visit with your primary care doctor with insurance. If you didn't have insurance, that same visit might be $150. The insurance company covers the extra $125.

Co-Insurance

Co-insurance is similar to a co-pay except that it's a certain percentage of the medical expenses you have to cover rather than a flat fee. Co-insurance comes into play after you've met your deductible. You might be responsible for 20 percent of medical expenses and the insurance company picks up the tab for the other 80 percent.

Deductibles

The deductible is the amount you need to pay toward medical expenses before the insurance company starts to pay. Plans with lower deductibles mean you don't have to pay as much before the insurance company starts paying for some or all of your medical care. Doctor visits, prescriptions, trips to the ER and other services are all counted toward your deductible.

Premiums

An insurance premium is the amount you pay each month for insurance coverage. The cost varies depending on the person and the plan. Plans with higher premiums often have lower deductibles and vice versa. Subsidies to reduce premiums are available in the healthcare marketplace for people who meet certain income guidelines.

Out-of-Pocket Maximum

The out-of-pocket maximum refers to the absolute highest amount that you have to pay before the insurance company pays for 100 percent of your medical costs. This includes deductibles, co-pays and co-insurance. This amount resets every year, but protects you from being stuck with exorbitant medical bills.

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Requirement to Offer Healthcare Insurance Under the Affordable Care Act

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