Health Insurance and Obamacare for Beginners: Understanding Your Quote Proposal

The purpose of this post is to help you understand basic terminology in a health insurance quote (when you get a premium estimate on healthcare.gov). 

I normally attach a disclaimer at the end of my posts.

Let me offer one up front: I am not a health insurance expert… at all. My business focuses on property and liability coverages for nonprofits.

But given the current health insurance situation here in the United States, I’m attempting to be helpful to those of you who’ve never had to consider health insurance questions before.

There are a large number of young, uninsured employees of small nonprofits who are trying to decide what coverage to purchase either on the healthcare.gov marketplace or through normal channels. The fact that everybody now has to have health insurance means there are more people who are forced to understand their options.

Reading Your Health Insurance Quote Proposal

ACA Screenshot Quote

I’m going to walk through each piece of the attached sample quote. I’m not offering suggestions or advice around Bronze, Silver, Gold plans or any specifications. This post is meant to help you decipher what the options mean.

Health Insurance Plan Name

Plan Name

This will be at the top left of your quote. It will give you the insurance company and the name of the plan. Companies and plans will differ by state.  The numbers: 4850/6350 refer to the individual deductible and the out of pocket maximum, respectively. We’ll get to that in a moment.

Policy Types: HMO/PPO/POS

Plan Type

These 3 three-letter _____ are simply the standard plan types.

HMO: This type of plan requires that you see doctors within your plan only for benefits to apply. You will also have to be referred to specialists by your primary care doctor.  You want to confirm that your main doctors are in the plan’s network (or just get new docs).

PPO/POS: These act similarly, so I’ll keep them together. Here, you can go to a specialist without having to get a referral from your primary care doctor. You can also get benefits even if you visit a doctor outside of your network. Your benefits just won’t be as good.   You also want to confirm that your doctors are in the plan,  but if one strays, you can still visit, just be aware your benefits will be much different when you do.

Monthly Premium

Premium

This is where we tend to go first. How much will this insurance cost us? In the Healthcare.gov plans, you’ll see a monthly amount in large, bold letters ($472 in the case of the example). This is the monthly amount after tax credit.

Under the premium per month, you see the number of enrollees (this example is a family of 5). Under that is the premium amount before tax credit. 

Deductible

Deductible

Since this example is for a family, the first deductible listed will be for the whole family ($9,700)

The number under the family total is the individual deductible ($4,850 in our example).

Deductibles work like this:

  • If I individually spend up to $4,850 on covered medical expenses, then the plan will begin to pay 80% of covered medical costs.
  • If any combination of individuals on the family plan hit the $9,700 family deductible, the plan will start paying the 80% of covered medical costs, even if the individual family member did not hit $4,850 (the individual deductible).

Out-of-pocket Maximum

Out of pocket max

This is the most you will have to pay before the plan kicks in and pays 100% of covered medical costs.

For a family, in this scenario, that out-of-pocket maximum is $12,700. For each individual it would be $6,350. Again, any combination of family member’s expenses to hit the $12,700 would trigger the out-of-pocket max to be met and 100% coverage for covered medical costs to start happening.

Copayments/Coinsurance

Copay & Coinsurance

These two terms are probably the most difficult to explain.

Copayment/Copay: This is the amount you’d have to pay for office visits, prescriptions, or emergency room visits. While your Copay might be $50,  be aware that some procedures during an office visit might fall outside the bounds of what is considered standard to an office visit. For example, when I see my ear, nose, and throat doctor, they stick this horrible scope into my nose to view my sinuses. That procedure is considered surgical and the costs apply to my deductible.

Coinsurance: Coinsurance is the amount that you get to help pay for. It’s your co-operation witth the insurance company to pay your medical bills. In this sample quote, you will pay 20% of covered medical expenses. This Coinsurance kicks in after the deductible is met. Before that, it’s all on you.

Primary Doctor

This is the description of how the Copay and Coinsurance will work when you visit your main doctor – your internist or family practitioner.

Specialist Doctor

This section describes how the Copay and Coisnurance will work when you visit a specialist. See also my reference to my Ear, Nose, and Throat doctor. This could be your cardiologist, your allergist, your orthopedist.

Prescription

Here, you see  your copay as far as medicines are concerned. In this example, your generic medications will cost $28.  Name brands? Out of luck? Check other policy options to get better options.

Emergency Room Visits

Finally, the quote describes your copayment for ER visits. In this case, you have to pay in full until your deductible is met.  Again, other healthcare.gov plans might have copay options for ER visits.

Summary

Hopefully, this walk through on the quote is helpful.

Each quote will have different options. Some will limit your office visits to doctors. You’ll have a Copay for the first 2-5 visits and then you’ll have to pay in full until your deductible is met. It’s the same way with specialists.

If you have further questions about the terminology, please drop a comment below. If you have a question, more than likely someone else has a question, too.

What to do now?

I said I wouldn’t advise, but here goes. Figure out your budget. And figure out what benefits are important to you. If you can’t get the benefits for your budget, then you’ll have to compromise on one of the other.

If you fill in your information on the premium estimator page on the Affordable Care Act website, then you’ll see all your health plan options. You can then make the best decision for you and your family.

Remember, you can still go ‘off the Exchange.’ Call a local insurance agent to get quotes from the insurance companies still offering normal plans in your state. You might not get tax breaks, but if you can afford it, there’s a chance you’ll find a more comprehensive plan.

Please leave a question or comment below. This health insurance issue is one we’re all figuring out and if you have a question, others do too.

Disclaimer: I am a licensed Property and Casualty Insurance Agent. This post is for informational purposes only and should not be considered direct advice. Each reader has her or his own circumstances and should consult with a Licensed Life and Health Insurance professional on those details to help make the most informed decision possible. 

 

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