Hello! I’m Brian David Gilbert, and recently, my COBRA insurance ran out. So, I used that QLE to look up some HDHPs and PPOs but ended up going with an average premium HMO health insurance policy. Every word in that sentence burned as it came out of my mouth. That’s right, folks, I’m talking about the beautiful American tradition of private healthcare. Embedded so deeply in the heart of the American people that only a surgeon could excise it—and it would cost at least $60,000.
As an adult who left a job with benefits at the end of 2020, I had planned to find my health insurance much earlier. But I had my doctors and therapists that I already liked. And every time I faced the marketplace’s heinous user interface and jargon-filled summaries, my mind would shrivel up like a deflating parade balloon.
When I was forced to find a new health insurance provider in June of this year, I decided to learn everything there was to know about the FSAs and the HSAs and the CHIPs and the dips and a one two three! I do, finally, have new health insurance, although it was a long and difficult road to get there.
I’m not the best person to explain the intricacies of the marketplace, but I’ve written this post to help ease you into the terminology in case you need to purchase health insurance and don’t want to spend a year and a half doing what I did.
For those of you non-Americans reading this post and thinking, “I do not need to read this post, I am BRITISH!” Consider this a cautionary tale. There are people in your country who want to privatize health care. And you can’t let them do that.
So let’s get into it. Please enjoy this cursory and most likely useless guide to American Health Insurance Terminology.
What’s Health Insurance?
We gotta start with a strong foundation. Insurance is a way to manage risk. Say I’ve got a figurine that I really love and would be heartbroken if SOMETHING TERRIBLE ever happened to it. An insurance company can quantify that emotional attachment and say, “Hey, if SOMETHING TERRIBLE happens to your figurine, we’ll pay you $100. All you gotta do is pay us $1 every month.” So if I sign that contract and pay them $1 every month, and SOMETHING TERRIBLE does happen to it, they’ll pay me $100 so I can replace it. But I could never really replace it.
Considering your health is defined as the mental and physical condition of your body, then health insurance should pay for you to get better in the event of an illness or bone break or SOMETHING TERRIBLE.
What’s Dental and Vision Insurance?
Here in the United States of America, scientists have researched for dozens of years to prove one inimitable truth: your teeth and your eyes are not a part of your body. And although we’ve gotten closer to understanding what those little wet balls are doing inside your skull, 9 out of 10 dentists agree that your teeth should not be trusted.
Technically, these are separate because dentistry and medicine are considered different fields, and so insurance companies view them differently. Vision insurance is different because it mostly covers eye exams and corrective lenses like glasses and contacts, and some people don’t need them! And for the people that do but can’t afford it, they can just squint hard.
What’s a Premium?
Ooh! A fancy word! Except it just means the fee you pay to your provider, usually monthly, to keep up your health insurance. It’s essentially the same thing as a subscription fee to Netflix, except in this case, you lose your health insurance if you stop paying it. As opposed to losing the ability to rewatch the 2015 Richie Rich reboot. And both of those things are equally tragic.
But the good news is that if you pay your premium every month, you’ve got your health insurance. And once you’ve got health insurance, you are set. You never have to worry about paying for healthcare ever again.
What’s a Deductible?
So you pay your premium every month! That’s great. It allows you to carry around a little card that says you’re insured, and you can go to the doctor, and they’ll give you the bill, and you have to pay all of it until you’ve filled up your deductible. For the sake of this example, let’s say your health insurance doesn’t have copays or coinsurance, just because I’m getting to that, and the circular nature of health insurance terminology makes it very difficult to decide which to talk about first.
Let’s say your deductible is $100. If you go to get a medical test that costs $100, you will have to pay $100. But after that, you’ve fully paid up your deductible, and that means the next time you go get a $100 medical test, your insurance will pay for it Or part of it, because there are also copays and coinsurance, but again, I’m getting there.
Your deductible resets with your plan, and most plans work on the calendar year, meaning your deductible would reset on January 1st. But if your plan is through your work and renews in the middle of the year, it might be a different date. (YOU SHOULD DOUBLE CHECK). Your premium and your deductible are often inversely related. So if you pay very little in premium, your deductible will be way higher. But if you pay a lot every month, your deductible will be small.
There are some health insurance plans that are literally called Catastrophic Health Plans for this very reason. You usually have to be under 30 to get one, and although you pay very little in your monthly premium, the plan doesn’t cover anything outside of three primary care visits a year. So sure, you save a lot of money on that monthly premium, but you better hope you don’t get in an accident, or else IT’S GONNA BE A CATASTROPHE.
For real, though, it is better than nothing. This health plan might not get you a lot of preventive care, but it could kick in during a catastrophic accident and keep you from going bankrupt. Or you might go—you might go a little bankrupt, but you won’t—you won’t go, like, Super Saiyan Bankrupt. But on the other hand, you can also get “no deductible” health insurance, which has WAY higher premiums, but it allows you to skip ahead to the good part of health insurance, where you get to pay:
What Are Copays and Coinsurance?
Copayments, or copays, are a set amount of money that you have to pay whenever you receive certain medical procedures, prescription meds, tests, etcetera. That test that cost you $100? It might have a $30 copay on it. So if you have no deductible or you’ve filled up your deductible, you’ll still have to pay that $30. And just to clarify, you can and probably will pay copays and coinsurance before you fill up your deductible. Say you’re getting a standard annual check-up. That might have a $10 copay associated with it. So even if you haven’t filled your deductible, you would just be paying $10. So that’s kinda nice.
And coinsurance? More like COIN- SURE -AINT’s gonna be in your pocket anymore because you’re gonna be paying with it—I thought that was gonna be cleaner. Coinsurance is just another way of splitting the cost with your insurer, and it’s better for you if the percentage is lower.
You have an MRI that costs $200, and you have a 20% coinsurance on MRIs, you would pay $40. But if you have 40% coinsurance, you’d pay $80.
Copays and coinsurance are terms that are pretty standard for everyone, whether you’re on an HMO or a PPO or an EPO or a CHIP.
What Is HMO, PPO, EPO, and CHIP?
Let’s start with CHIP because it’s the easiest to understand. CHIP stands for the Children’s Health Insurance Program. It was created in 1997 to cover kids whose families make too much money to qualify for Medicaid but not enough to afford private insurance.
Then what’s HMO, PPO, and EPO? These all fall under the category of managed care plans, and managed care is when an insurer makes arrangements with a network of healthcare providers to give you a certain price.
An HMO stands for Health Maintenance Organization, which means you have to get your care from a network of doctors and hospitals that have contracted with your insurance plan. If you go out of network, you’re paying for it, baby. You also have to get a referral from a primary care doctor to see a specialist.
A PPO stands for Preferred Provider Organization, and the main difference is that a PPO offers more flexibility in choosing doctors and specialists. You can go out of network and still be covered, although you’ll pay more. PPOs also usually have higher premiums and deductibles.
An EPO is an Exclusive Provider Organization, and it’s basically a hybrid between an HMO and a PPO. It has a network of providers that you must use except in emergencies, but you don’t need a referral to see a specialist.
What’s an HSA and an FSA?
These are both types of savings accounts that let you put away money for healthcare costs, and they come with some tax advantages. HSAs are Health Savings Accounts that you can use if you have a high-deductible health plan. FSAs are Flexible Spending Accounts that you can use with any type of health plan.
HSA funds roll over from year to year, but FSA funds do not. You have to use them within the plan year, or you lose them. So FSA actually stands for Frantically Spending Accounts.
What About COBRA?
No, not the cool snakes. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which is a law that allows you to keep your employer’s health insurance plan for a limited time after you leave your job, but you have to pay the full premium. So it’s usually really expensive.
And there you have it! Health insurance in America is like a video game with so many different mechanics and levels that it’s impossible to master. And if you make one wrong move, you’re gonna be paying for it. But at least now you know some of the terminology, so you can start to navigate this labyrinth.
And remember, if you ever feel lost, just give up. Just kidding! Go see a healthcare navigator, they can help guide you through the process. And maybe one day we’ll have a better system. But until then, good luck. And try not to break your leg.
