The Basics & Key Terms

Hey everyone, Jason here - your friendly neighborhood insurance expert! Welcome to Health Insurance 101, and today we're diving into The Basics & Key Terms that everyone needs to know to navigate their health insurance successfully.

Let's start with the fundamental costs you'll encounter. First up is your premium - think of this as your monthly membership fee. You pay this whether you use your insurance or not, and it keeps your coverage active. It's like a gym membership - you pay monthly to have access when you need it.

Next, let's talk about the deductible. This is the amount you need to pay out of pocket before your insurance really kicks in. For example, if you have a $2,000 deductible, you'll pay the first $2,000 of covered medical expenses yourself. After that, your insurance starts sharing the costs with you.

Now, copays and coinsurance - these are two different ways you share costs with your insurance company. A copay is a fixed amount, like $25 for a doctor's visit or $10 for a prescription. Pretty straightforward. Coinsurance is a percentage split - for example, after your deductible, you might pay 20% of costs while your insurance covers 80%.

The out-of-pocket maximum is your financial safety net. This is the most you'll have to pay in a year for covered services. Once you hit this limit, your insurance picks up 100% of covered costs for the rest of the year. This prevents catastrophic medical bills from bankrupting you.

Let's move on to the different types of plans you might encounter. First, we have HMOs - Health Maintenance Organizations. These plans typically have lower premiums but require you to choose a primary care physician who coordinates all your care. You'll need referrals to see specialists, and you generally can't see providers outside the network except in emergencies.

PPOs, or Preferred Provider Organizations, offer more flexibility. You can see any provider without a referral, even out-of-network ones, though you'll pay more for out-of-network care. Premiums are usually higher than HMOs, but many people value the freedom of choice.

EPOs, or Exclusive Provider Organizations, are kind of a hybrid. Like PPOs, you don't need referrals, but like HMOs, you must stay in-network for coverage. Think of it as a PPO without out-of-network benefits.

HDHPs, or High Deductible Health Plans, are exactly what they sound like - plans with high deductibles but lower monthly premiums. These often come with Health Savings Accounts (HSAs), which let you save tax-free money for medical expenses. They're great for healthy people who don't expect many medical costs but want protection against major expenses.

Now, let's talk about network coverage - this is crucial! Insurance companies negotiate lower rates with certain healthcare providers, creating their network. When you stay in-network, you get these negotiated rates and maximum coverage. Going out-of-network usually means higher costs and less coverage, if any.

Here's a real-world example: Let's say you need an MRI. In-network, the negotiated rate might be $1,000, and after your deductible, you pay 20% ($200). Out-of-network, that same MRI might cost $2,500, and you might pay 40% ($1,000) or even the full amount, depending on your plan.

The key takeaway here is that understanding these basics can save you thousands of dollars. Always check if providers are in-network before getting care, understand your plan's cost-sharing structure, and keep track of where you stand with your deductible and out-of-pocket maximum.

Remember, insurance is all about managing risk and costs. The more you understand these fundamentals, the better equipped you'll be to choose the right plan and use it effectively.

Thanks for listening to Health Insurance 101. I'm Jason, and I hope this helped demystify some of these important insurance concepts for you.

Episode Transcript

Speaker 1 (00:00):
Hey everyone, Jason here, your friendly neighborhood insurance expert. Welcome
to health insurance one hundred and one, and today we're
diving into the basics and key terms that everyone needs
to know to navigate their health insurance successfully. Let's start
with the fundamental costs you'll encounter. First. Up is your premium.
Think of this as your monthly membership fee. You pay
this whether you use your insurance or not, and it

(00:21):
keeps your coverage active. It's like a gym membership, you
pay monthly to have access when you need it. Next,
let's talk about the deductible. This is the amount you
need to pay out a pocket before your insurance really
kicks in. For example, if you have a two thousand
dollars deductible, you'll pay the first two thousand dollars of
covered medical expenses yourself. After that, your insurance starts sharing

(00:44):
the costs with you. Now, copays and co insurance. These
are two different ways you share costs with your insurance company.
A copay is a fixed amount, like twenty five dollars
for a doctor's visit or ten dollars for a prescription,
pretty straightforward. Co insurance is a percentage split For example,
after you're deductible, you might pay twenty percent of costs
while your insurance covers eighty percent. The out of pocket

(01:07):
maximum is your financial safety net. This is the most
you'll have to pay in a year for covered services.
Once you hit this limit, your insurance picks up one
hundred percent of covered costs for the rest of the year.
This prevents catastrophic medical bills from bankrupting you. Let's move
on to the different types of plans you might encounter. First,
we have HMO's Health Maintenance organizations. These plans typically have

(01:30):
lower premiums but require you to choose a primary care
physician who coordinates all your care. You'll need referrals to
see specialists, and you generally can't see providers outside the
network except in emergencies. PPOs, or Preferred provider organizations, offer
more flexibility. You can see any provider without a referral,
even out of network ones, though you'll pay more for

(01:50):
out of network care. Premiums are usually higher than HMOs,
but many people value the freedom of choice. Epos, or
exclusive provider organizations, are kind of a hybrid. Like PPOs,
you don't need referrals, but like HMOs, you must stay
in network for coverage. Think of it as a PPO
without out of network benefits. Hdhps, or high deductible health

(02:12):
plans are exactly what they sound like, plans with high
deductibles but lower monthly premiums. These often come with Health
Savings accounts hsas, which let you save tax free money
for medical expenses. They're great for healthy people who don't
expect many medical costs but want protection against major expenses.
Now let's talk about network coverage. This is crucial. Insurance

(02:34):
companies negotiate lower rates with certain health care providers creating
their network. When you stay in network, you get these
negotiated rates and maximum coverage. Going out of network usually
means higher costs and less coverage if any. Here's a
real world example. Let's say you need an MRI in network.
The negotiated rate might be one thousand dollars, and after

(02:54):
you're deductible, you pay twenty percent two hundred dollars. Out
of network, that same MRI might cost two thousand, five
hundred dollars, and you might pay forty percent one thousand
dollars or even the full amount, depending on your plan.
The key takeaway here is that understanding these basics can
save you thousands of dollars. Always check if providers are
in network before getting care. Understand your plans, cost sharing structure,

(03:19):
and keep track of where you stand with your deductible
and out of pocket maximum. Remember, insurance is all about
managing risk and costs. The more you understand these fundamentals,
the better equipped you'll be to choose the right plan
and use it effectively. Thanks for listening to Health Insurance
one hundred and one. I'm Jason, and I hope this
helped demystify some of these important insurance concepts for you.