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Health Insurance Basics

Choosing health insurance is one of the most important choices you can make to protect you and your family. We know that health insurance can be complicated, confusing and difficult to understand. Smart NC staff is available to answer your questions and help you understand your health insurance coverage.

What is Health Insurance?

Health insurance helps cover costs related to medical care such as doctor visits, hospitalization, prescription drugs, emergency services, laboratory tests and preventive care.

How Can I Get Health Insurance?

There are many different ways to get health insurance. Some of the most common ways are:

  • Through your employer
  • On your own through an individual health plan
  • Through the state or federal government (Medicare, Medicaid, N.C. Health Choice for Children, VA, TriCare)
  • Beginning January 2014 through the new Health Insurance Marketplace. For more information about the Marketplace, call 800-318-2596 or visit www.healthcare.gov. Enrollment into the Health Insurance Marketplace begins on October 1, 2013 and will run through March 31, 2014.

What Should I Consider When Looking for Health Insurance?

There are many things to think about when you are looking for health insurance because everyone’s needs are different. Here are a few questions to consider.

  • How much will it cost?
    • It is important to look at your total out-of-pocket costs including premiums, deductibles, co-pays and coinsurance. Generally, the lower your premium, the more you’ll pay in out-of-pocket costs.
  • Can I see my doctor?
    • It is important to check with your hospital, doctors and other health care providers to see if they participate in the plan.
  • How does the plan work?
    • Generally, you will need to meet a deductible before the plan begins paying claims. Most plans have a network of hospitals, doctors and other health care providers. Some plans may require a referral before you see a specialist.

HMO? PPO? Indemnity? What are these?

Whether you’re reviewing coverage options through your work or through the Health Insurance Marketplace, you may see different types of plans. It is important to understand how they work so you can make the best decision for you and your family.

  • HMO (Health Maintenance Organization)
    • Need to choose a primary care provider (PCP)
    • In most cases, need a referral from your PCP to see a specialist
  • PPO (Preferred Provider Organization)
    • Do not have to choose a primary care provider (PCP)
    • Do not need a referral to see a specialist
    • May pay more if you see a doctor that is not in the preferred network
  • HMO-POS (Health Maintenance Organization Point-of-Service)
    • May or may not require a primary care provider (PCP)
    • May or may not need a referral to see a specialist
    • May pay more if you see a doctor outside of the HMO network
  • Indemnity
    • Typically offered through an employer
    • You can go to the doctor of your choice
    • Most require you to satisfy out-of-pocket deductibles and pay a coinsurance for covered services

I don’t understand what these terms mean.

It is hard to understand how health insurance works when you don’t know the meaning of the terms.

For example, what is the difference between a copay and coinsurance? Here are a few of the most common health coverage terms and their meanings.

  • Coinsurance – The amount that you must pay for covered services, after the deductible has been met. For example, if a policy pays 80% of covered charges, then your coinsurance amount will be the remaining 20% of covered charges.
  • Copay - The fixed dollar amount that you pay to your provider each time you get medical care. For example, you may be charged a $20 copay when you visit your primary care doctor.
  • Deductible – The initial out-of-pocket amount that you owe for health care services before your plan begins to pay. For example, if your plan deductible is $1,000, your plan will not pay anything until you meet the $1,000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services.
  • Network - The hospitals, doctors, health care suppliers and facilities that your health plan has contracted with to provide health care services.
  • Premium - The amount that must be paid for your health insurance plan. It is typically paid by you or your employer.

You can find a comprehensive list of health care terms at http://www.cms.gov/CCIIO/Resources/Files/Downloads/uniform-glossary-final.pdf

Want to learn more about health insurance?

Download our Consumer’s Guide to Health Insurance for more information.